"OpenAI Shadow Stock" Collapses! SoftBank's Stock Price Halved Since November Highs

SoftBank is paying the price for its big gamble on OpenAI. As the most direct leverage tool for ordinary investors in OpenAI, this Japanese tech investment giant led by Masayoshi Son has seen its stock nearly cut in half over four months, amid growing market concerns about SoftBank’s involvement in OpenAI’s investment scale.

On Monday, SoftBank’s stock plummeted 9.8% in a single day, more than twice the decline of the Japanese market on the same day. The trigger was reports that OpenAI and Oracle have abandoned plans to expand the Stargate joint data center project in Texas, in which SoftBank is a key participant.

Just last month, SoftBank announced it had invested $30 billion in the latest $11 billion funding round for OpenAI, bringing its total investment in the ChatGPT developer to $64.6 billion, with a stake of about 13%.

This sharp drop in stock price has sparked widespread market concerns about SoftBank’s liquidity. S&P has already revised its outlook on SoftBank’s credit rating from junk to negative this month, citing worries over its liquidity and OpenAI’s credit quality.

Meanwhile, SoftBank is seeking bridge loans to cover the aforementioned investments until it can liquidate other holdings.

Stargate Project Changes Trigger Market Sell-Off

The immediate trigger for this round of stock decline was news that the Stargate data center expansion plan has hit a snag.

Reports indicate that OpenAI and Oracle have abandoned plans to expand this Texas-based, multi-party supported data center project, in which SoftBank is a major participant.

This news has raised doubts about the strategic logic of SoftBank’s deep integration with OpenAI. Last month, SoftBank completed a $30 billion commitment to a new funding round for OpenAI, bringing its total invested to $64.6 billion with a roughly 13% stake.

As the Stargate project’s prospects become uncertain, market expectations for the return on this huge bet have also wavered.

Other companies deeply involved in the OpenAI ecosystem, such as Oracle and CoreWeave, have also not been spared. Since SoftBank’s stock peaked in late October last year, the shares of Oracle and CoreWeave have both fallen more than 40%.

Liquidity Under Pressure, Credit Ratings Downgraded

SoftBank’s asset structure makes it particularly vulnerable in the current market environment. According to S&P data, over half of SoftBank’s $320 billion investment portfolio consists of non-listed, illiquid assets. This structure significantly constrains the company’s ability to quickly liquidate assets to meet large investment commitments.

S&P has revised its outlook on SoftBank to negative this month, citing two main concerns: the company’s overall liquidity position and the weak credit quality of OpenAI itself. This statement adds difficulty and cost to SoftBank’s efforts to secure bridge financing, especially as it actively seeks to raise funds.

Currently, SoftBank’s liquid assets include about $80 billion worth of shares in chip design company Arm.

Previously, SoftBank sold its holdings in Nvidia, using the proceeds to support early investments in OpenAI. Last week, despite geopolitical tensions in the Middle East, SoftBank pushed forward with the listing of its Japanese digital payment platform PayPay in New York, raising $1 billion.

Masayoshi Son’s “Euphoria Cycle” and Leverage Logic

From a broader perspective, SoftBank’s history is essentially a series of “euphoria cycles”: Masayoshi Son identifies a new investment theme, scales up investments, increases leverage, until shareholders or creditors—often both—begin to pressure.

Son has shown foresight at times. His early bets on Alibaba in China yielded substantial returns, and in 2017, the $100 billion Vision Fund redefined venture capital boundaries. But this model has also had notable failures, with WeWork being the most famous example, and the overall performance of the Vision Fund has experienced ups and downs.

Today, with its scale, reputation, and habitual use of leverage, SoftBank has become a rare liquidity tool for ordinary investors seeking exposure to major tech themes.

Analysts point out that this characteristic means that once market confidence in the “grand trends” Masayoshi Son bets on falters, SoftBank is often among the first to be reduced or sold off. Currently, SoftBank is the most direct channel for ordinary investors to leverage their bets on OpenAI—regardless of the direction.

It’s worth noting that the last major drop in SoftBank’s stock occurred in 2021, about eight months before a broader bear market.

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