SVB Financial Collapse Triggers Experts Fear Of Softbank Buyback, Alibaba Mark Down, Arm IPO Valuation Cut

  • SVB Financial Group's SIVB collapse triggered investor concern over the exposure to startup firms in the Softbank Group Corp SFTBF SFTBY SoftBank Vision Funds. 
  • SoftBank shares plunged 13% in four sessions to below 5,000 yen and are nearing a level that some see as Son's threshold for a buyback, Bloomberg reports.
  • While SoftBank expects almost no impact from the U.S. lender's collapse, few investors are buying the theory.
  • "Startups' funding conditions were getting tougher, and the window for IPOs was narrowing even before SVB's failure," said Tetsuro Ii, CEO at Commons Asset Management Inc.
  • SoftBank may have to mark down the value of its invested private companies, most notably Alibaba Group Holding Ltd BABA, whose shares plunged 30% from a January high.
  • Softbank's markdown might not impress investors after losses that drove SoftBank down 30% from a November peak.
  • Amir Anvarzadeh, a strategist at Asymmetric Advisors Ptd, remarks that the stock is approaching 4,800 yen," where Son tends to hit the panic button and unveil more buybacks."
  • The shares are trading at a discount to the net asset value of 38%, and Son could make a repurchase if that expands to 50%, Oliver Matthew, an analyst at CLSA Securities Japan Co, wrote in his Tuesday note.
  • According to Bloomberg Intelligence, the latest tech valuation rethink could wind up lowering the amount the company can raise in the IPO of its Arm Ltd chip unit.
  • SVB's collapse also "could be the trigger that convinces SoftBank to raise cash by selling Alibaba shares, as it positions itself to backstop some of its startups from any spillover effect," BI analysts Marvin Lo and Chris Muckensturm note. "Such a step would probably diminish prospects of a share buyback."
  • Photo via Wikimedia Commons
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