SFTBY - SoftBank Group KK: Positive Developments But Risks Remain Significant

2024-02-12 11:07:40 ET

Summary

• SoftBank reported a return to profitability in Q3 with a net profit of ¥950 billion.
• The quarterly results were driven by gains from the Vision Fund segment and a windfall from the merger agreement between Sprint and T Mobile US.
• The valuation of Arm Holdings remains key for Softbank's overall valuation, but the recent price explosion is an irrational exuberance, in my view.
• SoftBank faces challenges due to rising interest rates and a constant need for liquidity.

Readers of my previous work here on SeekingAlpha may already be aware of my bearish view of SoftBank Group KK ( SFTBF ; SFTBY ). Following strong quarterly results and a massive price hike of its most important subsidiary, the company has recently outperformed both my expectations and the broader market. That notwithstanding, I remain confident that the stock remains overvalued. Below, I will assess recent developments and explain, why I continue to have a bearish stance....

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