Hi Newsletterest, here's what you need to know for May 19th in 3:10 minutes.

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Today's big stories

An $18 billion hit to SoftBank’s Vision Fund led the conglomerate to report its largest annual loss in history
A few major players have predicted which investments stand to gain if central banks step in again – Read Now
Ryanair hunkered down for a long crisis in airline travel, but investors found it was better placed than many to weather the storm

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Remorse Code

What’s Going On Here?

Japan’s SoftBank had some making up to do on Monday after the tech-focused conglomerate reported its biggest annual loss in history.

What Does This Mean?

Softbank's $13 billion shortfall was down to one main culprit: its giant Saudi-backed Vision Fund, which lost a devastating $18 billion (tweet this). The portfolio of 88 startups is heavily weighted toward the sharing economy, and most of those companies have been hit particularly hard by the coronavirus-induced global downturn. Just look at ride-hailing giant Uber and coworking space provider WeWork, which between them are responsible for more than half the Vision Fund’s total loss. The former’s stock, after all, is still trading below its initial public offering price, while the latter has seen its value drop more than 90% from its peak. SoftBank’s probably regretting the $10 billion it piled into the coworking company right about now…

Why Should I Care?

For markets: Unprecedented scenes.
For the first time since SoftBank listed on the stock market over 25 years ago, the company warned investors it may not pay a dividend this year. Instead, the company plans to spend more than $20 billion – financed by selling its stake in Chinese ecommerce group Alibaba – on buying back its own shares to help prop up their price. And at least one company will be happy with that announcement: activist investor Elliott Management – which has a $3 billion stake in SoftBank – has been pushing the company to increase share buybacks and boost transparency around how it values its portfolio of startups.

The bigger picture: Such a Japan-ticlimax.
SoftBank is going all in both on the digitization of the new economy and – like several others in industries from healthcare to banks – on growth outside its home country. And that might be a smart strategy: data out on Monday showed Japan, the world’s third-largest economy, shrank by 0.9% last quarter – the second consecutive quarter of economic decline, which is the hallmark of an official recession.

Take action: How to do a better job of picking startups than SoftBank.

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2/3 Premium

Place Your Bets

What’s Going On Here?

With more central bank and government support for coronavirus-crushed economies looking increasingly likely, several major investors have weighed in on which areas they reckon will benefit.

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Our analysts walk you through how the economic recovery looks set to play out, as well as how to come out of it stronger than before.

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There are four valuation techniques you need to spot good value stocks – and the duds – from a mile off, and we’ll give them to you.

🖐 … then learn to leave stocks alone, maybe?

Goldman Sachs has laid out guidance on how much longer you should leave stocks alone – and the world’s richest are holding off too.

👋 Or just learn to be a contrarian

BlackRock and JPMorgan Chase have just chimed in with their own take, and they reckon stocks are actually a good bet right now.

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3/3

Emergency Exit

What’s Going On Here?

Ryanair admitted in its full-year earnings report on Monday that it’s expecting half the usual number of passengers this summer, but the Irish airline's emergency measures might've shown investors a way out of the panic.

What Does This Mean?

With coronavirus having transformed the prospect of travel from exciting to unnerving, airline stocks have now fallen around 50%. And even though Ryanair announced a $1.1 billion profit for the 12 months ending in March, its future initially looked bleak: the airline forecast a loss for this quarter, and it didn’t even try to predict how bad things might get this year.

So you’d be forgiven for doing a double-take as investors sent the Irish airline’s shares soaring 16% higher. Turns out the company has something to look forward to after all: the airline just won a UK government-backed loan that’ll increase its cash pile to nearly $4.5 billion. And given that its also trimmed weekly cash burn from over $200 million in March to just $65 million, the company should be able to keep going for some time yet.

Why Should I Care?

For you personally: Cheap and cheerful.
A crisis can be a prime opportunity to pick up stock market bargains, but beware: some stocks are cheap for a reason. Whether you think that includes Ryanair – whose shares are trading at about 10 times last year’s profits, a quarter cheaper than the average London-listed stock – depends if you think airlines will survive this crisis, or if they'll fold under further COVID-related travel restrictions.

The bigger picture: Oversize baggage.
Some travel operators have offered their customers full refunds in the name of good PR – even if it costs them millions. But reputation-nurturing hasn’t always been a priority for Ryanair and its famously combative CEO, who argues that passengers only care about cheap fares and reliable services. But after getting flak recently for failing to reimburse customers and cutting 3,000 jobs, he may be about to get a rude awakening…

Going cheap: How to apply your own investment style to beaten-down airline stocks.

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🙋 Ask a question

💬 Quote of the day

“Always there has been an adventure just around the corner – and the world is still full of corners.”

– Roy Chapman Andrews (an American explorer, adventurer, and naturalist)

Tweet this

🤔 Q&A · RE: Good Underdoggy

“What does it mean if investors want to buy more shares than those on offer in an initial public offering?”

– Max in Berlin, Germany

“In finance circles, that’s what’s known as an “oversubscribed” IPO, which is when demand for the shares being issued exceeds the number of new shares actually being offered. In that scenario, the company can either issue more shares, increase the price at which it’s selling each one, or some combination of both. If the demand for the shares being issued still exceeds the number of new shares being offered, investors will simply get fewer shares than they wanted. To make up for the shortfall, those investors tend to buy more shares after it officially starts trading on the stock exchange, which helps explain why oversubscribed IPOs tend to shoot up on their first day of trading.”

🙋 Ask a question

🌎 Finimize Community

🍿 Someone fetch the popcorn

Don’t worry if you’re running out of Netflix series: we’ve curated hours of investing entertainment for you. It’s basically the same as watching Tiger King, but with fewer hitmen. Unless they’re interested in fiscal self-improvement too. You know what, don’t listen to us: hitmen are welcome too.

🇺🇸 USA: Raising Capital During a Pandemic – 1pm EST, May 20th
🇸🇬 Singapore: COVID-19’s Impact on Global M&A – 6.30pm SGT, May 21st
🇦🇪 UAE: Making Sense of Oil Market Dynamics – 5.00pm Dubai Time, May 27th
🇫🇷 France: The Future of Blockchain & Cryptocurrency – 6.30pm CET, June 17th

📚 What we're reading

Banksy’s a true gent (Artnet)
Everyone has to pass the time somehow (My Modern Met)
At least you don’t live with a ghost (AV Club)

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Finimize - 😓 SoftBank's 18 billion dollar regret

Today's big stories

Remorse Code

What’s Going On Here?

What Does This Mean?

Why Should I Care?

Place Your Bets

Your starter kit for the aftertimes

Emergency Exit

What’s Going On Here?

What Does This Mean?

Why Should I Care?

🍿 Someone fetch the popcorn

Older messages

🤬 Recession, recession everywhere

📉 Aramco takes a huge hit

👎 WeWork won’t pay

🤮 20 million jobs lost

🤭 The biggest recession ever

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