SOFTBANK TAKES $10B HIT AFTER MAKING RISKY BETS ON TECH STOCKS

Shares in SoftBank retreated again on Tuesday, bringing losses in Japan to 7.7% over two days following reports that the conglomerate had been making huge and risky bets on tech stocks, Charles Riley reported for CNN Business on September 9, 2020.

The losses have wiped roughly $10 billion off the market value of SoftBank. How big are the bets? SoftBank bought $4 billion worth of options tied to underlying shares it had earlier purchased in tech firms like Amazon, Microsoft and Netflix, according to the Wall Street Journal. The newspaper said that the options generated an exposure of about $50 billion.

The size of the bets means that SoftBank CEO Masayoshi Son is now being called a "whale" — a heavy hitter with the power to move markets on his own. But investors in his company are nervous.

The options could pay off for SoftBank. According to the Financial Times, which was first to report on the position, the company is sitting on trading gains of about $4 billion. But such trades are also risky, since they could lead to big losses if equity markets keep falling. Remember: The Nasdaq plunged more than 6% in two days last week before the Labor Day weekend. Futures are down sharply on Tuesday. Why worry: Son had been preaching a defensive strategy after his company reported a record 1.36 trillion yen ($12.7 billion) operating loss in May caused almost entirely by his $100 billion Vision Fund, which invests in tech startups.

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