Thinking about investing in Softbank stock? Take a look at our comprehensive guide to find out everything you need to know before taking the plunge.
Softbank is a Japanese telecommunications company that has grown to become a holding company with investments in business sectors that include technology, energy, finance, stock market and semiconductor manufacturing.
Its assets are listed on the TOPIX 100 index. The Forbes 2000 list ranks it as the 36th largest public company in the world and the second largest publicly traded company in Japan after Toyota.
Softbank was founded in 1981. At that time, it was known as Softbank Corp. Its founder, Masayoshi Son, was 24 years old when he created the company. The company started as a software distributor, then moved into publishing in 1982 with Oh! PC for NEC and Oh! MZ magazines for Sharp. It soon became the largest Japanese publisher of computer and technology magazines.
Today, Softbank generates revenue from business lines that can be divided into the following four segments :
Softbank was listed on the stock exchange in 1994. At that time, it was valued at $3 billion. Since then, the conglomerate's cash position has grown steadily to 6,181 billion yen or $57.42 billion in the first half of 2020.
As a reminder, cash flow is defined as "all credit balances in bank accounts held by a company as well as its liquid assets in the form of liquid financial investments". The fact that a company has a large cash position is a sign of good financial health. Of course, the importance of cash flow is not everything. Other criteria must be taken into account before investing in a company's assets. These include expected margins, performance over the short, medium and long term and market share among others.
The Softbank of today is diametrically different from what it was in the beginning. Over the years, the company has moved away from its core business as a PC software company. Today, it is positioned in very diversified sectors.
The company’s current success is mainly due to a forward-looking vision and risk-taking. For example, it acquired considerable market share in the cell phone sector due to early positioning on the smartphone market and a policy of buying up secondary operators.
2019/2020 was certainly a period in which the group suffered. In 2018/19, the company had generated a net profit of 1,412 billion yen. And in 2019/20, it posted a loss of 1,364.6 billion yen. The company, like many others, was negatively affected by the Covid-19 crisis.
The situation has improved considerably in the last half of 2020 due to an external growth strategy and the spin-offs of the investments it has made in robotics and online services. Softbank stock is therefore an asset to watch!