SoftBank has been accused of being the “Nasdaq whale” that pumped up the US stock market with massive financial bets.
According to the Financial Times, the Japanese conglomerate has bought billions of dollars’ worth of options linked to its prolific tech investments over the past month in what one anonymous banker described as a “dangerous” gamble.
SoftBank is famous for its high-profile and occasionally troubled bets on risky tech firms such as Uber and WeWork that lose money for years but promise a long-term revolution.
This spring it bought nearly $4bn (£3bn) of shares in tech giants including Amazon, Netflix and Microsoft, and took a new stake in Tesla, helping to drive a remarkable stock market rally.
Charlie McElligott, a strategist at the Japanese investment firm Nomura, said in an analyst note that the enigmatic mega-buyer had played a major role in the recent stock market rally.
He said that the surge in options could cause markets to swing wildly and had forced banks selling options to hedge their positions with other purchases, creating a vicious cycle.
Rett Wallace, chief executive of the market intelligence firm Triton, shrugged at the sell-off, saying: “Why were we at those levels anyway?”
SoftBank did not respond to a request for comment.
Analysts at Capital Economics said there is no reason to think the stumble in shares is linked to any wider turmoil.
“Recent economic data continues to point to a reasonably strong recovery. Overall, this does not look much like the March sell-off, which was triggered by the impending collapse in economic activity,” said economist Jonas Goltermann.
“Although US ‘big tech’ stocks are undoubtedly a bit frothy, having risen by almost 80pc since mid-March, we don’t think this means they are necessarily in a dotcom-style bubble. Unlike in 2000, the largest tech firms today are highly profitable and their valuations, while punchy, don’t look so obviously unsustainable.”