SoftBank's massive IPO flops in market debut

Shares in the Japanese company's mobile telecommunications unit plummeted 15% in Tokyo on their first day of trading.

Posted: Dec 20, 2018 7:29 AM
Updated: Dec 20, 2018 7:43 AM

SoftBank's blockbuster IPO has flopped in its market debut.

Shares in the Japanese company's mobile telecommunications unit plummeted 15% in Tokyo on Wednesday, their first day of trading. The stunning plunge wiped out billions of dollars in market value.

The business is one of Japan's biggest wireless carriers and has provided the foundation for SoftBank CEO Masa Son's vast tech empire. By listing a big chunk of it, SoftBank Group (SFTBY) raised about $23.5 billion.

That makes it Japan's biggest ever stock float — and the world's second largest after Alibaba's (BABA) $25 billion listing in New York in 2014.

Strong demand from investors for a piece of the mobile business had prompted SoftBank to increase the number of shares it was selling. But it went public at a tough time for stocks: Japan's benchmark Nikkei index has fallen 7% since the start of December and is down about 14% from its recent high in early October.

SoftBank's mobile business, which has a market value of about $55 billion, also suffered some negative headlines this month. It suffered an embarrassing service outage on December 6 and said last week it's reviewing whether to remove equipment made by Chinese manufacturer Huawei from its network, a potentially costly move.

The CEO of SoftBank's mobile division, Ken Miyauchi, blamed the disappointing debut on poor market conditions. At a news conference after the market closed, he said that SoftBank had originally planned the IPO for September or October, before delaying it until December.

Fears of a price war

Japanese mom-and-pop investors, who bought up most of the shares in the IPO, were dumping the stock on the first day partly over fears of a damaging price war, according to analysts.

Japan's biggest wireless carrier, NTT Docomo (DCMYY), will slash the prices of its cellphone plans by as much as 40% next year after pressure from the Japanese government. Softbank is expected to follow suit.

Travis Lundy, an analyst at investment research platform Smartkarma, said the main reason for investors to buy the stock is because it pays a 5% dividend, which is large by Japanese standards. If a price war hits earnings, that dividend could come under threat.

Listing the mobile business is a key part of Son's efforts to reposition SoftBank as a global tech investor. The move splits the company in two, allowing investors to choose between its mobile unit and its tech investment business, which includes a big stake in Alibaba.

Son, SoftBank's billionaire founder, has become a major player in the global tech industry after launching the almost $100 billion Vision Fund last year. But the fund's heavy ties to Saudi Arabia came under scrutiny in October following the murder of Saudi journalist Jamal Khashoggi.

The Saudi sovereign wealth fund is the biggest single investor in the Vision Fund.

Son expressed "strong regret" last month over the killing of Khashoggi, but said it would maintain its ties with Saudi Arabia.

West Lafayette
Cloudy
32° wxIcon
Hi: 34° Lo: 31°
Feels Like: 19°
Kokomo
Cloudy
31° wxIcon
Hi: 33° Lo: 31°
Feels Like: 16°
Rensselaer
Cloudy
32° wxIcon
Hi: 34° Lo: 31°
Feels Like: 19°
Fowler
Cloudy
32° wxIcon
Hi: 33° Lo: 30°
Feels Like: 19°
Williamsport
Cloudy
32° wxIcon
Hi: 34° Lo: 31°
Feels Like: 19°
Crawfordsville
Cloudy
30° wxIcon
Hi: 35° Lo: 31°
Feels Like: 15°
Frankfort
Cloudy
30° wxIcon
Hi: 34° Lo: 30°
Feels Like: 15°
Delphi
Cloudy
31° wxIcon
Hi: 34° Lo: 32°
Feels Like: 18°
Monticello
Cloudy
31° wxIcon
Hi: 35° Lo: 32°
Feels Like: 18°
Logansport
Cloudy
32° wxIcon
Hi: 33° Lo: 31°
Feels Like: 20°
A windy and chilly day is expected. Tonight could be the coldest night of the season so far.
WLFI Temps
WLFI Planner

Indiana Coronavirus Cases

Data is updated nightly.

Cases: 1118335

Reported Deaths: 17712
CountyCasesDeaths
Marion1455892240
Lake724831254
Allen67063882
Hamilton51060487
St. Joseph49820649
Elkhart40268546
Vanderburgh34714497
Tippecanoe30808276
Johnson27696467
Hendricks26313385
Porter25657386
Madison21131455
Clark20238279
Vigo19059309
LaPorte17192261
Howard16770314
Delaware16761303
Monroe16628220
Kosciusko14293167
Hancock13113186
Bartholomew12983190
Warrick12210190
Wayne12090269
Floyd12011226
Grant11998245
Morgan10409192
Boone9869124
Noble9316122
Henry9177169
Marshall9152147
Dearborn8970100
Dubois8835140
Shelby8281130
Cass8167128
Lawrence8057185
DeKalb7817109
Jackson770793
Huntington7661115
Gibson7102118
Montgomery7101123
Harrison6954100
Knox6915116
Steuben669089
Whitley659660
Miami6595113
Putnam645085
Clinton627179
Wabash6221111
Jasper613192
Jefferson5856105
Ripley557294
Adams542281
Daviess5076117
Scott491580
Wells4836105
White478469
Greene4701101
Clay464662
Decatur4611110
Fayette452496
Jennings452067
LaGrange427491
Posey410044
Randolph3944107
Washington390956
Fountain375964
Fulton364874
Spencer362247
Starke355574
Owen353577
Sullivan348555
Orange331372
Jay331050
Rush309533
Carroll296239
Franklin292744
Perry290553
Vermillion283658
Tipton251167
Parke250130
Pike248644
Blackford222144
Pulaski210359
Newton182452
Brown177550
Crawford169129
Benton168417
Martin152120
Switzerland147612
Warren135816
Union122616
Ohio92413
Unassigned0595

COVID-19 Important links and resources

As the spread of COVID-19, or as it's more commonly known as the coronavirus continues, this page will serve as your one-stop for the resources you need to stay informed and to keep you and your family safe. CLICK HERE

Closings related to the prevention of the COVID-19 can be found on our Closings page.

Community Events