TOKYO -- Shares in SoftBank Group fell sharply on Monday after a sell-off in U.S. technology stocks on Friday, highlighting concerns about the company's exposure to the sector.
SoftBank's stock price opened 2.6% lower in Tokyo trading and extended its decline, ending the day down 7.15% -- its worst one-day performance since March. The tumble came after the Nasdaq Composite index, a gauge of U.S. tech stocks, fell 5% on Thursday and another 1.3% on Friday.
SoftBank has snapped up billions of dollars worth of shares in large tech companies like Amazon, Netflix and Alphabet, according to the company. But reports over the weekend suggest that the conglomerate's exposure to the sector is far greater because it has bought billions of dollars worth of call options -- derivatives that give it the right to buy stocks.
Monday's fall still leaves SoftBank shares up more than 20% compared to the end of last year. SoftBank is sitting on trading gains of about $4 billion from its use of the stock derivatives, the Financial Times reported on Sunday. In the past, the company has profited from a similar trading strategy using shares in U.S. chipmaker Nvidia.
Still, SoftBank's exposure to U.S. tech stocks is raising fresh concerns over valuations as economies still reel from the impact of COVID-19.
"When there is a tech bubble, Masayoshi Son is usually not too far away from the action," said Amir Anvarzadeh, senior markets strategist at equity advisory firm Asymmetric Advisors.
SoftBank's stock price plummeted in March amid concerns regarding its large debt and losses from soured investments in private companies like WeWork, prompting founder and Chairman Masayoshi Son to announce plans to monetize up to $41 billion in assets.
SoftBank recently exceeded that target, after selling stakes in two telecom carriers -- T-Mobile in the U.S. and Japan's SoftBank Corp. -- as well as raising cash using its stake in Chinese e-commerce giant Alibaba Group Holding.
SoftBank has said investing in publicly traded stocks is one way to manage part of the proceeds from the program. The investments will be kept "within the acceptable range of a diverse management," CFO Yoshimitsu Goto told analysts last month.