Affected by Nvidia and the results, Arm’s market value has more than doubled in three trading days, and SoftBank, which owns about 90% of Arm’s shares, has become the biggest beneficiary of the rise.
As early as June 2023, Masayoshi Sun told the outside world, “In the past few years, Softbank has been focusing on defense. Three years ago, SoftBank didn’t have much cash flow on its books, but as a result of being on the defensive all the time, the group’s cash has increased by 5 trillion yen.”
As a result, he announced that the relatively dormant state of SoftBank Group will end and launch an offensive in the AI space.
Four days doubled! A huge profit of 611.1 billion dollars, Japan’s richest man, Masayoshi Son, a complete turnaround. © Provided by Business News
Not only that, Masayoshi Sun also high-profile announcement, Softbank will soon launch a counter-offensive, hoping that Softbank can lead the artificial intelligence revolution. Today, Sun’s “water flow reversal” seems to have ended.
In fact, as Sun’s judgment, the global semiconductor boom cycle upward trend has been opened, the era of AI is coming.
I have to say, Masayoshi Sun bet right again.
Zhihu Finance believes that this round of Arm’s surge is mainly due to two factors:
First, since October 2022, with the global AI wave sweeping the world, NVIDIA’s stock price has risen by more than 500%. As the world’s leading AI chip company, NVIDIA, which has constantly set new record highs, has become the object of the industry’s pursuit.
Under the global semiconductor boom cycle, Goldman Sachs, Bank of America, Morgan Stanley have raised the target price of NVIDIA. Goldman Sachs believes that the investment in AI infrastructure construction, including governments as well as tech giants, will further boost NVIDIA’s revenue, so they raised NVIDIA’s full-year earnings estimates by an average of 22% from 2025 to 2026. In this context, NVIDIA has continuously surpassed Amazon, Google and other companies to become the third largest market capitalization of the U.S. stock market, and under the auspices of NVIDIA, other AI chip companies have also become the meat and potatoes of the market, and Arm is one of them;
Secondly, recently, Arm released its fiscal year 2024 third-quarter earnings report, which showed that the company’s fiscal third-quarter revenue of $824 million, a record high, up 14% year-on-year, exceeding analysts’ expectations of $760 million; net profit of $87 million, adjusted earnings per share of $0.29, higher than analysts’ expectations of $0.25.
Arm related executives said the expansion strategy has begun to pay off.
Zhihu Finance believes that Arm may become the “final work” of Masayoshi Sun, and he himself may also because of this transaction, to re-lay his own global investment master of the low position, for his career to draw a successful conclusion.
Almost sold Arm.
Masayoshi Son’s tragedy stems from his retirement plan in 2015.
Because of the incompetence of his successor, he had to sell Ali shares to hedge, in the process of cleaning up the mess, Sun Zhengyi fell deeper and deeper.
In 2017, in order to make Softbank another stage, to reproduce the “glory” of investing in Ali, so Sun Masayoshi tried to persuade the Saudi sovereign fund to contribute money to raise a total of 100 billion U.S. dollars to set up a phase of the vision fund.
To his surprise, his decision, almost pushed Softbank into the abyss.
As the investment direction of the first phase of the Vision Fund, mainly in the sharing economy, big travel and AI, unsurprisingly he spent a lot of money to invest in Uber, WeWork and other industry head companies.
According to Softbank’s financial report, the Vision Fund has invested $70 billion in the three years after the establishment of the first phase, and has invested in a total of 88 entrepreneurial projects, which include many companies in the field of the sharing economy, such as dropshipping, Uber, OYO , WeWork and so on.
Four days doubled! A huge profit of 611.1 billion dollars, Japan’s richest man, Masayoshi Son, a complete turnaround. © Provided by Business News
In Sun’s “money ability”, soon Softbank became the largest shareholder of Uber, WeWork and these enterprises. But never expected is that these enterprises actually pitched Masayoshi Sun.
Especially WeWork.
WeWork’s IPO plan failed, Morgan Stanley’s chief U.S. equity strategist Mike Wilson has commented: “WeWork initial public offering failure marks the end of an era, investors are no longer willing to pay for over-investment, and the days of providing generous funds for companies that do not achieve profitability are over. “
In order to ease the cash flow of the Softbank Group, the first thing Sun Masayoshi thought of was to sell Ali’s shares, but in this “black hole” of losses, Softbank almost liquidated Ali’s shares, Arm was also put on the shelf.
In 2020, softbank and Nvidia reached an agreement, plans to sell arm at a cost of 40 billion dollars. at that time, arm is one of the most valuable assets in the hands of Masayoshi Son, if Nvidia mergers and acquisitions are successful, then it will be the world’s largest chip mergers and acquisitions, but also the largest asset sale in the history of softbank.
However, due to the opposition of the United States, the United Kingdom and the European Union regulation, finally in February 2022, this sale plan collapsed. SoftBank then sought to re-list Arm.
In November 2022, Masayoshi Son announced that he was handing over the day-to-day work of the group to SoftBank executives such as CFO Yoshimitsu Goto, and that he himself would be focusing on chip company Arm in the future.
Masayoshi Son’s “darkness and lightness”
Masayoshi Sun’s “wait” has yielded good results.
On the 14th of 2023, Arm went public on NASDAQ, as the largest IPO project in the global technology field in 2023, Arm’s IPO was participated by 28 investment banks, more than 10 times oversubscribed, a total of 95.5 million ADSs were issued, and the fundraising was completed to raise $4.87 billion, and 10 companies, such as TSMC, Apple, Nvidia, Samsung, Google, Synopsys, and so on, have become the cornerstone investors. Cornerstone investors.
As the controlling shareholder of Arm, SoftBank has gained excessive returns in its IPO.
Masayoshi Son said that Arm is the future of Softbank, and he is also certain that Arm’s revenue will grow more than five times in five years.
Previously, Softbank had acquired a 25% stake in Arm in August 2023 for $161 from its Vision Fund.
As we all know, Arm’s main business model is technology licensing.
Four days doubled! A huge profit of 611.1 billion dollars, Japan’s richest man, Masayoshi Son, a complete turnaround. © Provided by Business News
Previously, many investment institutions did not look favorably on this company, believing that its growth space is limited. And part of the view that, in the long term, ARM cell phone processor business growth is facing challenges, and its attempts and layout in the cloud computing processor, automotive chips, AI has not formed a monopoly position.
Therefore, from the above dimensions, the market for Arm’s view seems to have diverged.
From the Arm disclosure of financial results, its patent licensing revenue growth is strong, licensing period to achieve revenue of $354 million, an increase of 18% year-on-year.
Not only that, Arm expects fourth-quarter revenue to reach $850 million to $900 million, also higher than the average analyst estimate of $778 million.
The company said it is tapping into new markets due to artificial intelligence demand, and that its main smartphone business is recovering from a downturn.
Affected by the earnings report exceeding expectations, Arm’s stock price jumped 47.89% on February 8, surging 104.12% in four trading days, and its market capitalization exceeded $168 billion, and its market value is now back down to $129.949 billion. It is reported that Softbank holds about 90% of Arm’s issued shares, which means that the market value of Arm’s shares held by Softbank has reached 116.95 billion U.S. dollars, according to its 32 billion U.S. dollars of investment counting up to the Arm of this income has profited more than 84.95 billion U.S. dollars (about 611.1 billion yuan), which means that all of its WeWork, as well as Uber and so on. losses have been fully recovered.
