"OpenAI shadow stocks" collapsed! SoftBank’s share price has halved since its high in November last year

# Dong Jing

Source: Wall Street CN

SoftBank, seen as a “shadow stock” of OpenAI, plunged **9.8%** in a single day on Monday. The trigger was that OpenAI and Oracle abandoned plans to expand the Stargate data center project in Texas.

SoftBank has invested a total of **$64.6 billion** in OpenAI, holding about **13%** of the company. Its deep entanglement has sparked liquidity concerns. S&P has revised the outlook on its junk credit rating to negative, and SoftBank is also seeking bridge loans to cope with funding pressure.

SoftBank is paying the price for its massive bet on OpenAI. As the most direct leveraged play for retail investors on OpenAI, shares in the Japanese tech investment giant led by Masayoshi Son have nearly halved in four months, amid growing market worries over the scale of SoftBank’s exposure to OpenAI.

On Monday, SoftBank’s stock slumped **9.8%** in one trading day, more than double the decline of Japan’s broader market. The catalyst was reports that OpenAI and Oracle had scrapped plans to expand the joint Stargate data center project in Texas, in which SoftBank was a key participant.

Just last month, SoftBank announced it would invest **$30 billion** in OpenAI’s latest $11 billion funding round, bringing its total investment in the ChatGPT developer to **$64.6 billion**, with a stake of around **13%**.

The sharp stock drop has sparked widespread concerns about SoftBank’s liquidity position. Earlier this month, S&P revised the outlook on SoftBank’s already junk-rated credit to negative, citing worries over its liquidity and the credit quality of OpenAI.

Meanwhile, SoftBank is seeking bridge loans to cover these investments until it can monetize holdings by selling other assets.

## Stargate setback triggers sell-off

The direct catalyst for this round of declines was news of the stalled Stargate data center expansion.

Reports stated that OpenAI and Oracle had abandoned plans to expand the multi-party-backed data center project in Texas, where SoftBank was a major stakeholder.

The news cast doubt on the strategic logic of SoftBank’s deep integration with OpenAI. SoftBank only last month finalized a $30 billion commitment to OpenAI’s latest funding round, pushing its total investment to $64.6 billion for a roughly 13% stake.

With the outlook for the Stargate project thrown into doubt, market expectations for returns on this huge bet have weakened.

Other companies deeply involved in the OpenAI ecosystem alongside SoftBank have not been spared. Since SoftBank’s share price peaked in late October last year, stocks of both Oracle and CoreWeave have fallen by more than 40%.

## Liquidity pressure mounts, rating outlook cut

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 unlisted, illiquid assets. This structure poses a significant constraint when the company needs to raise cash quickly to meet large investment commitments.

S&P revised SoftBank’s rating outlook to negative this month, focusing on two core concerns:

1) the company’s overall liquidity position;

2) the relatively weak credit quality of OpenAI itself.

This announcement comes at a critical time as SoftBank is actively pursuing bridge financing, undoubtedly raising its financing difficulties and costs.

SoftBank’s current liquid assets include an approximately **$80 billion** stake in chip designer Arm.

Previously, SoftBank sold its Nvidia holdings to fund early investments in OpenAI. Last week, despite volatility in the Middle East, SoftBank pushed ahead with a $1 billion New York listing of its Japanese digital payment platform PayPay.

## Masa’s “euphoria cycles” and leverage logic

From a broader perspective, SoftBank’s history has essentially been a series of overlapping “euphoria cycles”:

Masayoshi Son identifies a new investment theme, scales up investments, and ramps up leverage — until shareholders or creditors, often both, begin to push back.

Son is not without foresight. His early bet on China’s Alibaba delivered handsome returns, and his $100 billion Vision Fund in 2017 redefined the boundaries of venture capital. But the model has also left plenty of missteps, with WeWork being the most high-profile case, and the Vision Fund’s overall performance has been volatile.

Today, SoftBank’s scale, brand recognition, and leveraged approach have made it a rare liquid vehicle for retail investors to gain exposure to major tech themes.

Analysts note this characteristic means SoftBank is often among the first to be sold off when market confidence in the “grand trends” Son bets on wavers.

SoftBank is currently the most direct channel for retail investors to make leveraged bets on OpenAI — in either direction.

Notably, SoftBank’s last major stock decline was in 2021, which preceded the broader bear market by about eight months.

---

## Risk Warning and Disclaimer

The market is subject to risks, and investment requires caution.

This article does not constitute personal investment advice, nor does it take into account the specific investment objectives, financial situations, or needs of individual users.

Users should consider whether any opinions, views, or conclusions in this article suit their particular circumstances. Any investment made based on this article is at your own risk.