SoftBank’s Rocky Year Ends on a Winning Streak

Cashing in on another investment, SoftBank said Friday that it agreed to sell an 80% stake in Boston Dynamics, a company known for dog-like robots that can maneuver through rooms, to Hyundai Motor Group. The deal valued the robotics company at $1.1 billion. SoftBank has said more of its portfolio companies are poised to list or go on sale next year.

SoftBank’s share price has increased, too—around 9% this week alone and 66% this year. That puts this week’s stock level at its highest in 20 years, but still more than 20% below the bubble peak. The shares, which finished trading at 7,913 yen, equivalent to $76.04, on Friday, were pushed up by the overall market swell as well as a roughly $23 billion share-buyback program that is one of the world’s largest.

As of Friday, SoftBank has bought back around $14 billion of that total. The company is considering further buybacks that will lower the amount of shares outstanding and raise Mr. Son’s stake, said people with knowledge of the strategy. That in turn could make it easier for Mr. Son to realize a long-held idea of taking SoftBank private, they said.

Investors and analysts say SoftBank has addressed many of the issues that were giving them pause earlier in the year. The company has shored up its balance sheet by repaying billions of dollars in loans, and it started a smaller successor to the Vision Fund that has avoided many of the first fund’s missteps. It showed its ability to raise money quickly by selling enough assets to amass a cash pile of tens of billions of dollars.

Recently, SoftBank has dealt with one of investors’ biggest concerns: a series of options bets overseen by Mr. Son that earned the company the sobriquet of “Nasdaq whale” for their large size. The company said it lost nearly $3 billion on those trades in the quarter ended September. SoftBank shareholders spent most of an hourlong conference call with the company’s chief financial officer a few weeks ago complaining about them, according to people with knowledge of the call.

SoftBank has quietly started winding down the options trades, which were linked to share-price movements in tech stocks, and is dropping the strategy, said people familiar with the trading.

Stopping the options trading “is a good thing,” said David Gibson, an analyst at Astris Advisory Japan and former options trader. Last month, he wrote a report questioning SoftBank’s trades titled “SBG/Masa you need to read this about options.”

On Thursday, Mr. Gibson raised his target price on SoftBank shares to 9,810 yen from 8,400 yen, estimating that the Vision Fund could log as much as $14 billion in gains during the next 18 months if initial public offerings stay strong. Citigroup boosted its target price for the stock to 11,000 yen, higher than the peak of 10,111.1 yen the company hit at the height of the tech bubble in February 2000.

SoftBank declined to comment on the options trades and a potential management buyout.

Much of the rosy scenario depends on continued strength in tech stocks and IPOs in months to come. The market rise has helped push up the share price of Uber Technologies Inc., one of the Vision Fund’s biggest investments, by nearly 74% this year. Uber’s climbing shares have likely helped buoy valuations at the many other ride-hailing companies the Vision Fund owns, investors say.

SoftBank has also said its own portfolio and the Vision Fund’s portfolio are benefiting from trends such as online shopping that have accelerated during the pandemic. That could lead to stronger valuations and bigger profits for SoftBank if those companies go public in the next year or so.

“This stock is leveraged for strong capital markets,” said Mr. Gibson. “But if they’re not strong, it could go the other direction.”

—Margot Patrick contributed to this article.

Write to Phred Dvorak at [email protected]