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 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.
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.
Jethro Mullen and Yoko Wakatsuki contributed to this report.
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