Can Masayoshi Son create another Alibaba?

Masayoshi Son, CEO of Softbank Group, said at the annual shareholder meeting on June 25 that he will withdraw from Alibaba’s board of directors. “As a director, I graduated from Alibaba.”  Masayoshi Son said.

Since 2005, Masayoshi Son has served as a director of Alibaba for 15 years. For this graduation, neither side disclosed the specific reasons for the resignation. Facing outside speculation, Masayoshi Son said that this departure is the same as Jack Ma’s resignation from Softbank’s board of directors, which does not mean that there are any differences between them. He has a good relationship with Jack Ma and still regards him as a “friend for life”, while Alibaba is still the most important role in SoftBank’s portfolio.

How much did Masayoshi Son make from Alibaba?

In 2000, about 10 minutes after the first meeting, Masayoshi Son decided to invest US$20 million in Alibaba, which had just been founded less than a year ago.

Four years later, shortly after Alibaba just launched Taobao, Softbank continued to add additional investments. At that time, Alibaba raised a total of 82 million US dollars, of which Softbank invested 60 million US dollars.

Through two investments, SoftBank exchanged about 30% of Alibaba’s shares for US$80 million. By the time Alibaba was listed on the New York Stock Exchange in 2014, the value of Alibaba’s shares held by SoftBank had doubled, it’s approximately 2,900 times.

On June 25, Alibaba’s market value was nearly US$600 billion, and the 25.9% Alibaba shares held by SoftBank were worth more than US$150 billion. The total market value of SoftBank on the Tokyo Stock Exchange is about 108.7 billion US dollars. This also means that the market value of Alibaba stocks held by SoftBank is higher than that of SoftBank itself.

Can he create another Alibaba?

After investing in Alibaba with great success, he successively invested in Uber, WeWork, OYO, and other enterprises. But in recent years, the performance has not been as expected.

On May 18, Softbank released its 2019 financial report, with an operating loss of approximately 1.365 trillion JRY ($12.7 billion). This is Softbank’s highest loss since its listing in 1994 and the first loss in nearly 15 years.

Among of them, Uber’s investment loss was US$5.179 billion and WeWork’s investment loss was US$4.582 billion. The valuation of other portfolio companies also declined sharply in the first quarter of this year because of the pandemic effect. In sharp contrast to them, since the outbreak of COVID-19, Alibaba stock not only didn’t fall sharply during this period but also rose a little bit.

The Vision Fund set up by Masayoshi Son in 2016 is also mixed, it is the world’s largest technology investment fund. The financial report shows that there are currently 88 companies in the Vision portfolio, with a total investment of about 75 billion US dollars. In the past year, 26 of the 88 companies have increased their valuations, 47 of them have fallen in valuation, and 15 companies may go bankrupt.

From the perspective of SoftBank’s investment returns over the years, it is difficult to have successful investment cases like Alibaba. For Masayoshi Son or Softbank, recreating another Alibaba or repeating the same mistake of WeWork, time may be the best answer.