SoftBank Loses $15B Market Valuation This Week As Investors Concerned Over Exposure To US Tech Stocks

Softbank Group Corp SFTBY ADR’s have dropped around 13% since the beginning of the month.

According to the Financial Times, the company has lost $15 billion in market cap this week alone, as its shares tank in Tokyo on investor concerns related to its exposure to United States tech stocks. However, on a year to date basis, Softbank ADR’s remain up around 23%.

What Happened:  Softbank has a massive investment in US-listed tech stocks. The Japanese conglomerate’s portfolio includes investments of around $3.9 billionin large tech companies.

Softbank disclosed that it had purchased over a $1 billion worth of Amazon Inc AMZN stock before June 30. Some other tech stocks owned by Softbank include Alphabet Inc GOOGL GOOG, Adobe Inc ADBE, Tesla Inc TSLA, Netflix NFLX, and Uber Technologies UBER.

Why It Matters: Two days ago, FT reported that Softbank was a “mystery whale” that led an upward rally of tech stocks in the past. The company held an aggressive stance with a derivative-based strategy and massive exposure to tech stocks.

And with the drag in tech stocks, investors have witnessed significant erosion in wealth. The high-risk investment strategy gained traction in the past few months with a renewed vigor on option premiums that is focused on individual U.S. tech stocks, FT noted.

The report also claimed that Softbank has a $30 billion notional exposure on call options.

Price Movement:  Softbank ADRs fell 7.78% and were quoting $27.02 at the end of the trading session on Tuesday.

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