Finimize - 🤕 SoftBank brings this on itself

Hi Reader, here's what you need to know for May 13th in 3:12 minutes.

🌍 Funding for African startups just keeps coming and coming. Join Daba’s Anthony Micle for Alternative Investments In Africa on Friday, and find out how you can tap into the continent’s booming growth. Grab your free ticket

Today's big stories

SoftBank reported its biggest-ever quarterly loss
We’ve looked into whether you should buy into Cathie Wood’s struggling innovation ETF – Read Now
Disney reported a mixed set of results

Safety First

What’s Going On Here?

SoftBank reported its biggest-ever quarterly loss on Thursday, so the Japanese conglomerate is going to great lengths to quit hitting itself.

What Does This Mean?

What a difference a year makes: SoftBank has gone from a record profit in the first quarter of 2021 to a record loss in this one. That’s because its Vision Fund – the world’s biggest tech-focused investment fund – has been pummeled by rising interest rates and China’s tech crackdown, with Chinese ride-hailing firm Didi and South Korean ecommerce giant Coupang each losing about half their market values.

So the conglomerate is shaking up its approach: it said it’ll invest half or even a quarter as much this year as last, and that it would be more cautious around all things China. It also reassured investors that its plan to list ARM on the stock market was still on track, and said that the UK chip designer could well become the most valuable asset in its portfolio.

Why Should I Care?

For markets: History could repeat itself.
SoftBank’s stock fell 5% on the news, meaning it’s now down around 50% over the past year. Consider too that this report only covers till the end of March, and that markets have fallen even more since. Some analysts, then, are skeptical the world’s biggest venture capital fund can even survive. Of course, SoftBank did experience a comparable collapse during the dotcom boom, which it’s more than recovered from since. That might be why the company’s confident that it’ll bounce back from this pickle within the next couple of years.

Zooming out: WeWorking on it.
Speaking of embarrassing companies SoftBank regrets investing in: WeWork reported another quarterly loss on Thursday. But at least things are going in the right direction, with the coworking company notching its best desk sales since before the pandemic. And since it thinks demand for office space is on the up and up, it’s expecting its revenue to jump 30% this year from last too.

You might also like: How to invest like a venture capitalist.

Copy to share story: https://www.finimize.com/wp/news/safety-first-2/

🙋 Ask a question

Analyst Take

Should You Buy Into Queen Cathie’s Innovation ETF?

Stéphane Renevier, Analyst

Cathie Wood’s been getting a lot of flack lately.

Ark Invest’s flagship ARKK Innovation ETF – which specializes in “innovation stocks” like Tesla, Coinbase, and Teladoc – is down 76% from its peak, and investors are starting to get riled up.

And it’s true that there are reasons to doubt the ETF: the disruptive, high-growth companies that Ark invests in aren’t exactly dirt cheap, even if stocks have corrected lately.

But there are also reasons why it might outperform – not least that the stock market is essentially underweighting future winners in favor of current ones.

So that’s today’s Insight: if you should buy into the fund while it’s in a slump, or if you should listen to the haters.

Read or listen to the Insight here