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Is Rakuten Inc. a better investment than SoftBank Group?

Is Rakuten Inc. a better investment than SoftBank Group?
Asked by
Peter Kimani categorie-icon time-icon2 months ago
1 Answer Answer Question

James Mason
Answered time-icon2 months ago

Well, according to its Q1 results, Rakuten Inc.’s profits quadrupled from the $1 billion profit it booked from Lyft’s IPO. This is not the first huge gain the company has generated from its investments in tech startups as it also made massive profits from its investment in Pinterest and Careem.

On the other hand, SoftBank is known for making big investments in tech companies as well with some returning billion dollar profits. However, the main difference between the two firms is that SoftBank Group has more funds at its disposal as compared to Rakuten given the $100 billion it raised from investors for its vision fund.

In terms of price, SoftBank Group shares trade at ten times the value of Rakuten shares, which could be a crucial factor to consider before deciding to invest in either company. SoftBank also has a larger debt burden as compared to Rakuten and is planning to keep borrowing amid a rapid expansion strategy, which increases the risk of default and losses.

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