Nasdaq ‘Whale’ SoftBank takes $10 billion hit

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Nasdaq ‘Whale’ SoftBank takes $10 billion hit
nobihaya / CC BY

Shares in SoftBank reversed again on Tuesday, the losses have wiped approximately $10 billion off. The conglomerate had been obtaining vast and risky bets on tech stocks bringing the earning losses in Japan to 7.7% in just two days. 

What kind of big deals?

According to the WSJ SoftBank purchased $4 billion shares in technology firms like Microsoft, Amazon and Netflix that actually produced an outing of approximately $50 billion. The second richest person in Japan is called a whale because of the ability to influence markets, but with this, investors in CEO Masayoshi Son’s company are agitated.

Trading gains could turn into losses

Financial Times was the first to inform that SoftBank is resting on trading profits of about $4 billion. However, the trade is a risky business and could also lead to significant losses if equity markets continue to fall. But it is bizarre to see Nasdaq slumped more than 6% in just two days in the Labor Day weekend that is the last closing week. Futures are on a downturn and on Tuesday it is declining sharply.

Son got it covered

He has been practising preventive strategy post his company reported a loss in May($ 12.7 billion), which was caused solely by his $100 billion Vision Fund that was invested in tech startups.

In the previous month, SoftBank stated that it will be selling more than 1 million shares of SoftBank Corp.(nearly $14 billion). With this came another strategy of the asset sale in March that will grow something around $42 billion.

 Analysts are still examining the motive behind the strategies of options investing and questioning how this defensive strategy is working for them. SoftBank has so far refused to comment, making it difficult for some investors. If investors require to obtain options on the US tech stocks now, they are authorised to do that without purchasing shares in SoftBank.