What's going on?

SoftBank reported the highest-ever annual profit for any Japanese company on Wednesday, even though investors have been giving its stock a wide berth (tweet this).

What does this mean?

SoftBank�s Vision Fund � the world�s biggest tech-focused venture capital fund � seriously benefited from last quarter�s tech stock rally, and not just because it boosted the shares of its already-listed investments like Uber. The rally also encouraged some of the company�s startup investments � including Coupang, the �Amazon of South Korea� � to make their stock market debuts. Both factors worked together to push the Vision Fund�s profit up for the third quarter in a row, making the fund the biggest driver of SoftBank�s record-breaking full-year earnings. That�s quite the about-turn: the Vision Fund was the reason for the company�s biggest loss in its history early last year.

 

Why should I care?

For markets: All is not well.

SoftBank�s stock price has been on a tear in the past year, and investors reckon its share buyback program � which reduces the supply of shares in the market, in turn boosting the prices of those that are left � has had a lot to do with it. But things have taken a wrong turn in the last couple of months: the company�s share price has dropped 14% since its two-decade high in March � both because it�s so far failed to promise more buybacks, and because it�s been caught up in the recent tech stock selloff.

Zooming out: Carmakers are (still) in trouble.

SoftBank�s annual profit is roughly double the country�s previous high, but Toyota needn�t feel too put out about losing its record: the carmaker announced on Wednesday that its quarterly profit almost doubled from a year ago, and it said it�s expecting its sales and profit to return to pre-pandemic levels this year. Still, that confidence is the exception among automakers, not the rule: its rivals are still battling a chip shortage that�s losing them billions of dollars in revenue.