Reddit User Short Thesis on SoftBank (SFTBY) Amid AI Bubble Concerns

This analysis is based on a Reddit post [1] published on November 12, 2025, at 15:47:21 EST, where a user advocated for shorting SoftBank Group Corp. (SFTBY) as a proxy for betting against an alleged AI bubble. The user revealed a short position of 750 shares and compared SoftBank’s OpenAI investment to the WeWork situation [1].

Despite the bearish thesis, SoftBank’s recent market performance and financial results present a contradictory picture:

• Current Stock Performance
  : SFTBY trades at $70.80 after a 4.20% decline in after-hours trading on November 12, 2025 [0]
• Recent Volatility
  : The stock dropped 10% following SoftBank’s $5.8 billion Nvidia stake sale announcement [3][6]
• Year-to-Date Performance
  : Despite recent volatility, SFTBY remains up 144.64% YTD and 230.07% over 3 years [0]
• Analyst Consensus
  : 75% of analysts rate SoftBank as BUY with only 25% HOLD [0]

The Reddit user’s short thesis appears disconnected from SoftBank’s actual financial performance:

• Record Quarterly Results
  : Q2 2026 net profit more than doubled to ¥2.5 trillion ($16.6 billion), driven primarily by OpenAI investment gains [1]
• Vision Fund Success
  : Investment gains of ¥3.5 trillion, with ¥2.16 trillion coming from OpenAI holdings [1]
• Best Performance
  : Since July-September 2022 [1]
• Diversified Revenue
  : Telecom operations revenue rose 7.9% to ¥3,400.5 billion [1]
• Arm Holdings
  : Chip design subsidiary delivered record results with 518% profit surge [1]

The Reddit user’s concern about SoftBank’s AI exposure overlooks recent strategic moves:

• Nvidia Stake Sale
  : SoftBank sold its entire $5.83 billion Nvidia stake in October 2025 to fund AI investments [1][3]
• Capital Deployment
  : Proceeds used to increase OpenAI investment and fund other AI-related acquisitions [1]
• Liquidity Position
  : Company maintains ¥4.2 trillion in cash with improved loan-to-value ratio of 16.5% [1]

SoftBank’s commitment to OpenAI is substantial but contains risk mitigation:

• Total Expected Investment
  : $34.7 billion by end of December 2025 [1]
• Valuation Progression
  : From $300 billion (March) to $500 billion (October) valuation [1]
• Conditional Investment
  : Investment could be reduced to $20 billion if OpenAI fails to restructure by year-end [1]

The Reddit thesis significantly underestimates SoftBank’s business diversification. While AI investments dominate headlines, the company’s core telecommunications business provides stable cash flow, and Arm Holdings has become a major profit driver. This diversification provides cushioning against AI-specific downturns [1].

There’s a notable disconnect between AI bubble concerns and SoftBank’s actual performance. The company’s record earnings and strong analyst ratings suggest market participants recognize value beyond the AI hype, while the Reddit user’s thesis focuses primarily on bubble risks [0][1].

While the WeWork comparison has some merit given Masayoshi Son’s mixed track record, it overlooks successful investments like Alibaba and the current strong performance of the Vision Fund portfolio. Son’s experience includes both successful and failed transformative technology bets, suggesting learned risk management [1].

Despite strong fundamentals, legitimate concerns exist:

1. OpenAI Losses
   : Sources report mounting losses at OpenAI despite rising valuations [1]
2. AI Investment Sustainability
   : Massive capital commitments may not generate commensurate returns [1]
3. Valuation Volatility
   : SoftBank’s earnings are highly sensitive to fair-value movements in tech holdings [1]
4. Debt Load
   : High leverage could become problematic if investment returns decline [1]

The recent 10% stock decline following the Nvidia sale announcement [3][6] demonstrates SoftBank’s vulnerability to market sentiment shifts around AI investments. Further AI market corrections could pressure the stock despite strong fundamentals.

1. Strategic Positioning
   : Recent asset reallocation shows disciplined capital deployment [1]
2. Valuation Metrics
   : P/E ratio of 17.97x appears reasonable given growth prospects [0]
3. Entry Point
   : Recent volatility may present attractive entry points for long positions [0]

The Reddit user’s short thesis advocating for shorting SoftBank as a proxy against an AI bubble appears premature given the company’s record financial performance, diversified business model, and strategic asset management. While legitimate concerns exist about AI valuations and OpenAI’s mounting losses, SoftBank’s recent earnings of $16.6 billion, strong analyst consensus, and successful track record with the Vision Fund suggest the short position may be mistimed [0][1].

The company’s conditional OpenAI investment structure, with potential reduction to $20 billion if restructuring fails, demonstrates some risk awareness. The recent Nvidia stake sale and strong telecom performance provide additional buffers against AI-specific downturns [1].

Investors should monitor OpenAI’s restructuring progress by December 31, 2025, AI market valuation trends, and SoftBank’s debt management capabilities. The stock’s recent 10% decline may present opportunities rather than validate the short thesis, though high volatility warrants careful risk management [0][1][3].