SoftBank Group Corp shares skyrocketed over 17 percent on Thursday, adding $14 billion to the Japanese tech investment firm’s market value, after it announced a record share buyback and a strong quarterly earnings, Reuters reported.
SoftBank’s CEO Masayoshi Son has frequently complained about the company’s lingering conglomerate discount and is using part of the windfall from its domestic teleco’s blockbuster IPO to make efforts and lower the valuation gap.
According to Atul Goyal, an analyst at Jefferies, the buyback puts a floor under the company’s stock.
Shares of SoftBank jumped as much as 9,955 yen, recording its biggest intra-day gain in almost a decade.
So far, the shares soared 36 percent this year, but still 14 percent below its high hit of 11,500 yen in September last year before concerns were raised about the company’s financial ties to Saudi Arabia following the murder of Jamal Khashoggi, a Saudi journalist.
After closing the market on Wednesday, the Japanese conglomerate said it would repurchase its stock worth up to 600 billion yen ($5.46 billion), funded by the proceeds of SoftBank Group Corp’s December IPO.
Hideki Yasuda, an Ace Securities analyst, said that there was no consensus on how to value the company. After the IPO, the group is more like an investment trust and became easier to understand, he added.
As reported in Reuters, the Japanese tech investment giant announced a 60 percent surge in its third-quarter operating profit, elevated by increasing valuations of its growing investments in technology.
At quarterly earnings call on Wednesday, Son made a 90-minute presentation outlining the company’s investment strategy and what he considers as the chronic undervaluation of its shares. SoftBank also announced that it had dumped its entire stake, worth over $3 billion, in chipmaker Nvidia in January.
Currently, SoftBank’s market value is 11 trillion yen. However, when its stakes in SoftBank Corp, Arm Holdings, the Saudi-backed Vision Fund, and others are taken into account, its holdings are worth nearly 21 trillion yen, Son said.
Analysts say the Japanese conglomerate will possibly struggle to offload its stake in major firms like Yahoo Japan without lowering the stock price and a sale of its stake in Alibaba is expected to entail a hefty tax bill.
Several investors remain reliant on SoftBank for disclosure of valuations, with its many investments in unlisted, loss-making start-up companies, according to Reuters news.