With a huge loss of 3 trillion yuan, Sun Zhengyi even lost Ali this time

One 3 trillion, SoftBank once again refreshed the loss record

Yesterday (August 10), Sun Zhengyi continued to "clear" Ali's news on the hot search.

The first is to continue to eat Ali's "old book". On August 10, SoftBank Group announced that its board of directors had agreed to settle up to 242 million forward contracts for Alibaba ADR (American Depositary Shares), with an estimated total transaction revenue of 4.6 trillion yen ($34 billion) and a reduction in its shareholding to 14.6%.

Although SoftBank remains the only major shareholder of Alibaba holding more than 5% of the shares, Alibaba has agreed with SoftBank Group on a voting agreement that SoftBank has the right to nominate a director to Alibaba's board of directors, and if SoftBank's shareholding falls to less than 15% of the total number of outstanding shares, such nomination rights will terminate. That is to say, SoftBank has since lost the right to nominate directors.

Alibaba, son's most successful investment, has brought huge benefits to SoftBank. But now That Son Zhengyi has given up on this "hen who laid the golden egg", it is not surprising - because Sun Zhengyi, who was once the richest man in the world, is almost going to become the "first loser"!

August 8 was originally a very auspicious day, but Japan's SoftBank Group announced extremely painful news: - the company lost 3 trillion yen, setting a record for the highest loss in the history of Japanese companies!

According to the second quarter of 2022 performance report released by SoftBank Group, SoftBank's net loss in the second quarter was 3.16 trillion yen (about 158.2 billion yuan), compared with a profit of 761.51 billion yen in the same period last year, setting a new record loss of 1.7 trillion yen in the previous quarter and hitting a record high.

Among them, the SoftBank Vision Fund lost 2.33 trillion yen in the second quarter, setting a new record for a loss of 2.2 trillion yen in the previous quarter. In the same period last year, the Vision Fund also achieved a profit of 235.6 billion yen.

In 2021, SoftBank Group has ushered in the darkest moment from peak to bottom, and in just one year, the company's performance has plummeted from a net profit of 5 trillion yen (about 250 billion yuan) in 2020 to a net loss of 1.708 trillion yen (about 90 billion yuan), which caused an uproar in public opinion. Unexpectedly, in just a few months, this huge loss record was refreshed again.

When SoftBank suffered a huge loss in the first two years, Son Zhengyi had already encountered many doubts, but he was still optimistic that "it is not my hairline that is receding, but my life is moving forward." "I myself, like Jesus, am not understood. Jesus was also misunderstood and criticized. ”

But this time, Son Zhengyi finally bowed his head. He said, "This is the biggest loss since the establishment of the company." At the same time, a self-examination was conducted: "I am ashamed of my past greed for huge profits." When asked by the media what the lessons were, he replied that "there are too many lessons to be counted."

It is worth noting that at the earnings report, the first page of SoftBank's PPT put a portrait of Tokugawa Ieyasu, a Japanese historical figure, to allude to the dilemma he is facing today.

Tokugawa Ieyasu was an ambitious politician, but in the Battle of Mikatahara in Japan, due to his quick success and reckless dispatch of troops, he was defeated miserably, and even his own stand-in was beheaded. When he fled back to his castle, he found that he was still incontinent. However, At that time, Tokugawa Ieyasu was not embarrassed, and he also asked the painter to paint a portrait of his sad face at that time for future self-encouragement.

Son uses Tokugawa Ieyasu as a metaphor to show that he is learning from his mistakes, and on the other hand, he may also express his ambition to make a comeback in the future—after all, tokugawa Ieyasu, who is embarrassed in the portrait, later became a famous Shogun of Japan.

However, after the last burst of the Internet bubble, Son Zhengyi flipped from the bottom of the wind, this time, can he let the myth play out again?

The foam blown up by the two hands has reached the moment of paying

The main reason for the SoftBank Fund's huge losses was the collective plunge in the valuation of technology stocks – the SoftBank Vision Fund held 80 investments in the first phase, including 23 listed companies, and the unrealized valuation losses of listed portfolio companies totaled $6.8 billion. The Second Phase Fund holds 269 investments with unrealized valuation losses of US$9.8 billion and valuation losses of listed companies totaling US$3.839 billion.

But Son's difficult situation today, in addition to the reasons for the general environment stock price, is also related to his personal aggressive investment style - the bubble that he personally held up has also reached the moment of paying for the bubble.

In an interview with Reuters, Former Alibaba CEO Wei Zhe referred to Son as "Mr. 10 times": "Every time I explain any business plan or model, Son's first reaction is to say, 'David (Wei Zhe's English name), can it be expanded tenfold?'" ’...... When I tried to answer, he would go on to ask, 'Ten times more?' ’”

Son's investment style has always been open and radical. His best game is to spend a lot of money on the target company, quickly push up the valuation of the startup company, and expand the market scale. The money he comes up with is usually several times what the entrepreneur originally asked for, threatening them and handing it over to their competitors if they don't.

In the final analysis, although the performance brought by Sun Zhengyi's style of play is eye-catching, it is actually only "paper wealth". Every invested company is a huge valuation, each is a "unicorn" with a cool concept, but each needs to burn a lot of money, but whether it can make money is still unknown.

That is to say, these beautiful figures are all supported by floating profits, and the rising valuation of the invested companies has led to the growth of SoftBank's performance. But the valuation of the primary market has always been a metaphysics, as long as the equity is not realized, these performances are only book profits, can not be converted into the cash flow of enterprises.

Son has also said several times before that he will change his radical style, but he still has a very honest body when he says so, and he made a big bet on start-up technology companies at the peak of the market last year. Last year, SoftBank's funds poured about $38 billion into 183 companies, a record in the venture capital world.

In the past, even according to the probability of "nine wins and one loss", the company that successfully invested could bring ten times and a hundred times the return, supporting this model to play, such as an Ali that let Sun Zhengyi eat dividends for many years. But now the environment is different, all the bubbles are clearing, the era of stupid money is over, and Son Zhengyi is facing the systemic risk of the collective decline of technology stocks.

In particular, Son Zhengyi also bought at the highest point. Among the cases that led to SoftBank's huge losses, there are many star projects that Are regarded by Son Zhengyi as the "next Ali".

For example, South Korean e-commerce coupang, known as the "Korean version of Alibaba", was successfully listed on the New York Stock Exchange in March last year, and its stock price rose by 40% on the first day. SoftBank, the largest shareholder, has earned a book return of $24.5 billion, the largest since Alibaba went public in BABA.US 2014.

But debut was at its peak, and Coupang's stock price continued to fall after its listing, from the $35 issue price to $19 today, bringing a $4.3 billion unrealized loss to SoftBank.

And WeWork, once evaluated by Son as "probably worth hundreds of billions of dollars." "The next Alibaba" will be listed in March 2021, with a closing price of $11.78 on the first day and a market capitalization of nearly $8 billion; More than a year later, the stock price has fallen to $5, and nearly 60% of the market value has disappeared.

All in all, the plunge of one high-valued project after another perfectly explains what is called "wealth that has not landed, it is only paper wealth".

Three Ali saved Son Zhengyi again, but what about the next time?

The tide receded, and Fang knew who was swimming naked. At this time, Son Zhengyi not only needed a pair of swimming trunks, he needed a wetsuit.

Faced with such a huge loss, Son Zhengyi tried everything to fill the hole.

Earlier this year, Son announced a rare formal slowdown in investment at the 2021 annual report meeting: SoftBank will take a conservative pace of investment — this year's investment will be halved or a quarter compared to last year.

But this is far from enough to save Son Zhengyi, for him, what needs to be worried more than investment at the moment is to withdraw funds and cash out to survive.

Since the beginning of this year, Sun Zhengyi has accelerated the "clearance" to sell the high-quality assets in his hands, and even "sold cheaply" at the price of cabbage. In March, SoftBank again sold 50 million shares of South Korean e-commerce giant Coupang, 40% below the issue price; There is also the clearance of Sun Zhengyi, who once said that he was very optimistic about the prospects of the industry, and all the shares of cruise, a star project for autonomous driving.

Of course, this is not enough to save SoftBank in the mire, the biggest life-saving straw is still from Alibaba, the current market value of the group is only 63 billion US dollars, and the shares held in Alibaba are worth 60 billion US dollars, this asset is large enough, SoftBank Group's current hole is too big, and only Alibaba's huge assets can fill it. After this sell-off, SoftBank expects total trading proceeds to reach $34 billion.

This makes people sigh, Alibaba is the most successful investment in Son Zhengyi's life, he ambitiously set up a $100 billion SoftBank Vision Fund, hoping to incubate the next Alibaba, not only never to replicate this success, but finally became the source of huge losses, leaving a chicken feather, even the old money has lost it!

The so-called time and earth are all working together, and the heroes are not free.

A person's success, in addition to personal efforts, but also depends on the opportunities given by the times. It is difficult to copy not Ali, but the times, when Sun Zhengyi fell into a desperate situation, just in time to save him by the rapid development of China's Internet dividend, from 2000 to 2020, the speed of industry development in these 20 years is unique in human history, and this environment can give birth to such a great company as Ali.

However, the times are gone, and it is difficult to turn back after carving a boat and asking for a sword! Now Sun Zhengyi, what can he rely on to turn over?

In any case, let us bless Son Zhengyi.

This article originated from investors