Finimize - 😳 SoftBank's slipup

What’s going on here?

SoftBank was looking pretty vulnerable last quarter, reporting on Thursday that its Vision Funds were in the red once again.

What does this mean?

SoftBank’s investors had every reason to be hopeful. The firm’s Vision Fund business oversees the biggest tech-focused investment funds in the world – and with tech valuations on the rebound, they were probably counting on the rising tide to raise the firm’s leaky boat. No dice, though: some big investments did jump (like South Korean e-commerce company Coupang), but ill-starred private investments still clipped its wings. See, SoftBank marked down the value of its private holdings – the bulk of its investments – by about $3.9 billion, overshadowing its public holdings’ $1.9 billion gain. The resulting “accolade” was the corporate equivalent of a dunce’s cap: a record loss for the whole year, after a fifth straight quarter in the red for those once high-flying funds.

Why should I care?

For markets: Still just window shopping.

SoftBank needs to be careful it’s got the cash to cover debts and other expenses. And while auctioning off parts of its Alibaba stake has helped so far, the firm seems to be itching to strike a bolder, less defensive stance now – and that’s going to require deeper pockets. Taking its chip-designing titan ARM public will help raise some funds – but right now it’s at the mercy of the flailing markets. The upshot: banks are touting a super-wide valuation range for ARM, anywhere between $30 and $70 billion.

The bigger picture: Boarding the AI train.

SoftBank’s hoping to splash that cash on AI first and foremost. And that’s no wonder: the technology’s seeping into sectors left, right, and center, from aiding drug discoveries to improving educational offerings. But given the hype – and the fact SoftBank’s not exactly early to the party – it’ll have to work extra hard to sort the wheat from the chaff.

What’s going on here?

Disney’s results, out on Wednesday, showed the media giant’s stepping – not leaping – toward its profit-improving targets.

What does this mean?

Let’s not beat around the bush: Disney’s streaming service lost four million subscribers last quarter – on the face of it, a serious bummer for investors. But the firm’s price hikes and newfound frugality meant the division’s losses ultimately shrank way more than expected. That, plus a regal performance from Disney’s theme parks – which scored a $1.7 billion profit, 50% above pre-pandemic levels – helped overall results inch in above expectations. Mind you, there was an important hiccup: revenue dropped 7% annually for the firm’s old-school TV business, with more and more folk ditching traditional television – and that “cord-cutting” could spell trouble.

Why should I care?

Zooming in: Knight in tarnished armor.

It’s not a surprise that cord-cutting has got Disney’s old stalwart, the traditional TV business, on the wane. But with streaming – the firm’s knight in shining armor – losing viewers too, Disney’s facing a real challenge. See, it’s not clear whether the firm’s current mishmash of a decaying old TV business and an unprofitable streaming service will ever hit the heights of Disney’s pre-streaming TV days. And that uncertainty’s got investors second-guessing whether the firm’s truly a clever long-term bet.

The bigger picture: Park life.

A trip to Disney’s parks costs a pretty penny these days – so with 7% more Mickey fans making the pilgrimage last quarter compared to the year before, you might wonder whether this whole impending-recession shtick is more fiction than fact. After all, splurge-worthy vacations can be decent indicators of the economy’s overall health – and on Disney’s evidence alone, everything seems fine and dandy. But cyclical businesses like theme parks can turn on a dime, so you’d be wise to keep an eye on future attendance stats for signs of any little cracks.