"OpenAI shadow stock" collapsed! SoftBank's stock price has halved since its peak in November last year

SoftBank is paying the price for its bet on OpenAI. As the most direct leveraged tool for ordinary investors in OpenAI, the Japanese tech investment giant led by Masayoshi Son has seen its stock price nearly halved in four months, due to growing market concerns about the scale of SoftBank's investment in OpenAI. On Monday, SoftBank's stock price plummeted 9.8% in a single day, more than double the decline of the Japanese market on the same day. The trigger was the reported abandonment of plans to expand the Stargate joint data center project in Texas by OpenAI and Oracle, with SoftBank being a key participant in the project. Just last month, SoftBank announced a $30 billion investment in OpenAI's latest round of financing of $11 billion, bringing its total investment in the ChatGPT developer to $64.6 billion, with a shareholding ratio of about 13%. The sharp drop in stock price has triggered widespread concerns in the market about SoftBank's liquidity situation. S&P has adjusted SoftBank's already junk-rated credit outlook to negative this month, citing concerns about its liquidity and the credit quality of OpenAI. Meanwhile, SoftBank is seeking bridge loans to cover the aforementioned investment until it can realize cash through the sale of other holdings. Changes in the Stargate Project Trigger Market Sell-off The direct trigger for this round of stock price decline is the news that the Stargate data center expansion plan has encountered obstacles. According to reports, OpenAI and Oracle have abandoned plans to expand this jointly supported data center project located in Texas, of which SoftBank is an important participant. This news has raised doubts in the market about the strategic logic of SoftBank's deep ties with OpenAI. Just last month, SoftBank completed a $30 billion commitment to OpenAI's new round of financing, bringing its total investment to $64.6 billion, with a shareholding of about 13%. As uncertainties arise regarding the prospects of the Stargate project, expectations for returns on this massive bet have also been shaken. Other companies that are similarly deeply involved in the OpenAI ecosystem have not been spared. Since SoftBank's stock price peaked at the end of October last year, Oracle and CoreWeave have both seen their stock prices drop by over 40%. Liquidity Under Pressure, Ratings Downgraded SoftBank's asset structure makes it particularly vulnerable in the current market environment. According to S&P data, more than half of SoftBank's $320 billion investment portfolio consists of non-public, illiquid assets. This structure poses a significant constraint when the company needs to quickly realize cash to cover its massive investment commitments. S&P has adjusted SoftBank's rating outlook to negative this month, with two core concerns: the overall liquidity situation of the company and the relatively weak credit quality of OpenAI itself This statement undoubtedly increases SoftBank's financing difficulty and cost at a time when it is actively seeking bridge financing. The liquid assets currently held by SoftBank include shares of chip design company Arm, valued at approximately $80 billion. Previously, SoftBank sold its Nvidia holdings, with the proceeds used to support its early investment in OpenAI. Last week, SoftBank also withstood the pressures of the turbulent situation in the Middle East to advance its Japanese digital payment platform PayPay's $1 billion listing in New York. Masayoshi Son's "Excitement Cycle" and Leverage Logic From a more macro perspective, SoftBank's development history is essentially a series of overlapping "excitement cycles": Masayoshi Son finds new investment themes, the scale of investment expands accordingly, leverage rises, until shareholders or creditors—usually both—begin to apply pressure. Masayoshi Son is not without foresight. He made a significant return by betting on Alibaba in China early on and redefined the boundaries of venture capital with the $100 billion Vision Fund in 2017. However, this model has also left behind several failures, with WeWork being the most well-known case, and the overall performance of the Vision Fund has experienced ups and downs. Today, SoftBank, with its scale, visibility, and habitual use of leverage, has become a rare liquidity tool for ordinary investors to gain exposure to major technology themes. Analysis indicates that this characteristic means that once market confidence in the "grand trends" that Masayoshi Son bets on wavers, SoftBank is often the first target to be reduced. Currently, SoftBank is the most direct channel for ordinary investors to make leveraged bets on OpenAI—regardless of the direction. It is noteworthy that the last significant drop in SoftBank's stock price occurred in 2021, and that decline preceded a broader bear market by about eight months