SoftBank Shares Jump After Arm’s Bullish Forecast Surprises

February 8, 2024

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(Bloomberg) — SoftBank Group Corp. shares rallied almost 10% after Arm Holdings Plc gave a surprisingly bullish earnings forecast, beating analyst estimates as its push beyond smartphones helps fuel growth.

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Arm said revenue in the three months ending in March will be $850 million to $900 million, far higher than the average analyst estimate of $778 million. The UK chip designer’s shares soared in after-hours trading, bringing the company’s value closer to $100 billion.

SoftBank held onto a stake of about 90% in Arm as the chip designer went public last year. Its shares traded as much as 9.6% higher in early Tokyo trading.

Prior to Wednesday’s rally in New York, Arm shares jumped 40% in the December quarter, likely boosting SoftBank’s net asset value to over ¥18 trillion ($121 billion), one of Masayoshi Son’s favored metrics for the investment firm’s health. The chip design firm is now the single largest asset within SoftBank’s portfolio, estimated to account for roughly a third of the total.

While Arm’s share price increase has no direct impact on the Japanese company’s bottom line, higher value for the company raises the odds for Son to consider fresh asset-backed financing to borrow money for new investments.

SoftBank is scheduled to report earnings for the December quarter later Thursday. After a series of brutal setbacks, the Japanese technology giant is on track for one of its strongest quarters in years, including what’s likely to be its first profit in more than a year.

–With assistance from Ian King.