Softbank sells a third of its Alibaba stake following record market loss

Softbank founder and CEO Masayoshi Son invested $20 million in Alibaba in 2000

After posting a $23 billion quarterly net loss on Monday, SoftBank announced plans to reduce its stake in Alibaba to 14.6% from 23.7% for more than 4.6 trillion Japanese yen ($34.1 billion).

In the filing, Softbank cited the “challenging” and possibly “prolonged” state of the current market as the reason behind the sale. “By settling these contracts early, SoftBank will be able to eliminate concerns about future cash outflows, and furthermore, reduce costs associated with these prepaid forward contracts. These will further strengthen our defense against the severe market environment,” stated the filing.

Softbank founder and CEO Masayoshi Son invested $20 million in Alibaba in 2000, which ended up becoming one of the most lucrative business decisions ever recorded. When Alibaba went public in 2014, Softbank’s shares were worth a staggering $60 billion. Since then, reported Bloomberg, Softbank’s investors have encouraged the company to “cash in” this stake, adding that it is likely the company will further reduce its shares over time.

In addition to selling off these Alibaba shares for cash, Softbank has recently exited several other tech companies including Uber and Opendoor.

Alibaba has also had a rough go lately, primarily due to a long regulatory battle with Chinese authorities. Further, the company has lost about $600 billion in market value since October 2020 and is facing significant economic headwinds. These combined hurtles have forced the Ablibaba to cut costs where it can, and earlier this year, the company announced employment layoffs.

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