SoftBank took another loss | Palantir said things have turned "lumpy" |

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Today's big stories

  1. Japanese conglomerate SoftBank reported its biggest-ever quarterly loss (again)
  2. You only need to look to Buffett, Graham, and Klarman for the secrets to investing in a recession ā€“ Read Now
  3. Software firm Palantir reported worse-than-expected results

SoftBankā€™s Vision Fund Isnā€™t What It Used To Be

SoftBankā€™s Vision Fund Isnā€™t What It Used To Be

Whatā€™s Going On Here?

Japanese conglomerate SoftBank reported a new biggest-ever quarterly loss on Monday.

What Does This Mean?

SoftBankā€™s Vision Fund business ā€“ which manages the worldā€™s biggest tech-focused investment funds ā€“ continues to be pummeled by a sharp selloff in tech stocks on the back of rising interest rates. It posted a record $17.2 billion loss last quarter, caused by big drop-offs in the value of key holdings like DoorDash, Coupang, and SenseTime. That means the segment was largely responsible for SoftBankā€™s $23.4 billion total loss ā€“ its second record loss in a row.

SoftBankā€™s shares barely budged after the news, probably because investors were already well aware that this was on the cards. So by now, theyā€™re probably wondering what the point is: SoftBankā€™s share price is now close to where it was five years ago, before the Vision Fund even existedā€¦

Why Should I Care?

The bigger picture: Keep it on the down-low.
SoftBankā€™s Vision Fund also holds big stakes in hundreds of unlisted tech startups. And while itā€™s much harder to value those investments, it doesnā€™t sound like things are going particularly well: SoftBank wrote down their values last quarter, after weak performances across the board and lower valuations in recent fundraising rounds. Thatā€™ll make it even harder for SoftBank to get out of this rut: itā€™s now less likely to list these firms on the stock market, which means it has less cash to plow into new investments.

Zooming in: Buy never, pay never.
Klarna is SoftBankā€™s problem in a nutshell: the buy-now-pay-later company ā€“ and member of SoftBankā€™s Vision Fund ā€“ saw its valuation slashed by 85% after its fundraising round last month, taking it from $46 billion to just $7 billion (tweet this). Thatā€™s down to two big problems: customers saddled with debt are struggling with the ā€œpay laterā€ bit, while others are simply deciding not to ā€œbuy nowā€ in the first place.

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Analyst Take

Buffett, Graham, And Klarman On How To Invest In A Recession

Buffett, Graham, And Klarman On How To Invest In A Recession

By Theodora Lee Joseph, Analyst

Itā€™s official: the US economy is in a technical recession.

And whether the US government agrees with that definition or not, one thing is indisputable: the investing backdrop isnā€™t getting any better.

So itā€™s on you to find new ways to invest at a time like this, and value investing ā€“ finding stocks that look cheaper than the rest of the market ā€“ might be just what you need.

That brings us to Warren Buffett, Seth Klarman, and Ben Graham: three value investors who know exactly how to invest at a time like this.

So thatā€™s todayā€™s Insight: eight lessons from three value investing gurus.

Read or listen to the Insight here

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Palantir Shouldā€™ve Known SPACS Were Too Good To Be Trueā€¦

Palantir Shouldā€™ve Known SPACS Were Too Good To Be Trueā€¦

Whatā€™s Going On Here?

Secretive analytics company Palantir announced a mixed set of quarterly results on Monday.

What Does This Mean?

On the face of it, Palantir had a good quarter: the companyā€™s revenue grew a better-than-expected 26% last quarter from the same time last year. But dig a little deeper, and things start to come apart at the seams. First, the firm posted a surprise loss for the quarter, mainly because its investments in SPACs ā€“ the mid-pandemic fad into which it pumped more than $400 million last year ā€“ havenā€™t panned out. And second, its revenue outlook for this quarter fell short of estimates, which Palantir put down to the ā€œlumpinessā€ and unpredictability of government contracts. But investors donā€™t want excuses, they want results: the firmā€™s share price fell 15% after the update, meaning itā€™s now dropped almost 50% this year.

Why Should I Care?

Zooming in: It should be Palantirā€™s moment.
Palantirā€™s international revenue ā€“ which makes up 40% of sales ā€“ barely grew at all last quarter, even as the firm has been trying to curry favor with European governments on the back of the Russian invasion. And sure, some of that was down to the strong dollar, which lowers the value of international sales when converted back to the US dollar. But it also suggests that Palantir's sales approach ā€“ whether charm offensive or fear-mongering ā€“ hasnā€™t been working quite as well as it hoped.

The bigger picture: Palantir wants you.
Plenty of tech firms have said recently that theyā€™re freezing hiring or cutting jobs, but not Palantir: it announced last week that itā€™s on track to increase headcount by about 25% by the end of the year, as it accelerates its pace of hiring to meet its ambitious sales goals. But since thatā€™ll push its costs up even more, it remains to be seen if the extra sales will justify the investmentā€¦

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šŸ’¬ Quote of the day

ā€œIt always seems impossible until itā€™s done.ā€

ā€“ Nelson Mandela (a South African anti-apartheid activist)
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