The colorful Japanese billionaire behind the summer’s unexpected tech rally — and subsequent declines — appears to be up to his old tricks.
Masayoshi Son, the 63-year-old founder and CEO of SoftBank, was unmasked as the so-called “Nasdaq Whale” in early September after it was revealed that he plunked down billions to buy options in popular tech stocks like Amazon, Alphabet, Microsoft and Tesla during the COVID market crash. Son’s buying spree — funded by both Softbank and his own pocket — is believed to have helped push the Nasdaq up 60 percent between April and September — contributing to a bubble that came tumbling down at summer’s end.
Now traders say they are seeing a familiar pattern in options trading that suggests the Nasdaq Whale is back and raising fears that tech investors could be in for another big hangover.
“It looks a lot like what he did before,” said one trader at a large bank. “Similar stocks and similar volume of call options. And it’s still crazy.”
Call options provide traders with a chance to profit on a stock if the price hits a certain level. If a stock sees a heavy volume of calls, it can force other traders to buy in and cover their position — sending the price even higher. Such trading is risky, however, and can often result in punishing losses, especially for investors who jump in on the buying without realizing the true reason for the rise.
Amazon, Netflix, and Facebook all popped on Friday morning, helping to send the Nasdaq higher at a time when the other indices which were dragging on the news that President Trump had tested positive for COVID-19. The tech-heavy index later gave back those gain, trading down 1.8 percent in mid-day trading to 11,117.14
“Someone was buying a lot of calls on tech stocks,” confirmed one hedge fund manager. “If it’s SoftBank again, they clearly think this is worth doing again, and why not? He’s a different kind of guy.”
Such trading is also risky for Softbank, which saw its stock dropped more than 8 percent the week Son was reported to be the Nasdaq Whale as investors digested its $50 billion exposure to a radical trading idea. On Friday, however, the stock barely budged, trading up 0.9 percent to $31 a share.
Son — who is worth $30.2 billion, according to Forbes — is known for making bold moves, which has resulted in a mixed bag of results in recent years. For almost every mega win he has had an epic failure, including his huge bet on like WeWork, which helped drag results down this year. After SoftBank reported an $18 billion loss in May, Son reportedly compared himself to Jesus Christ, telling analysts that “Jesus was also misunderstood and criticized.”