Shares of telecom leader T-Mobile US (NASDAQ: TMUS) sank as much as 4.6% today, before rebounding to a 4% decline as of 1 p.m. ET.
Shares fell on news that major investor SoftBank sold a large block of T-Mobile shares. However, looking at SoftBank’s other business endeavors, it’s probably not too much of a concern for T-Mobile shareholders.
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Masayoshi Son likely needs some cash
Today, Bloomberg reported that SoftBank sold about $4.8 billion shares of T-Mobile, totaling 21.5 million shares at a price of $224 per share. That’s about a 3% discount to T-Mobile’s closing price yesterday. Often, when an investor wants to sell a large block of shares quickly, that investor will have to sell at a discount to move that much stock.
The move amounted to about 25% of SoftBank’s stake in T-Mobile, which SoftBank acquired when T-Mobile acquired Sprint in 2020, in which SoftBank had invested heavily.
Image source: Getty Images.
There could be more sales, but T-Mobile shareholders shouldn’t panic
It’s not a big guess as to why SoftBank is selling shares; Softbank made an agreement to invest $10 billion in OpenAI back on April 1, and will also invest up to $30 billion in the current artificial intelligence (AI) leader by the end of this year if certain conditions are met.
That massive new investment in OpenAI, and likely other AI companies, too, means SoftBank will most likely have to sell off some of its big “winners,” such as T-Mobile, which is Softbank’s largest holding of which it does not own a majority stake, and Arm Holdings, which is consolidated with Softbank’s financials, due to Softbank’s 90% current ownership.
Needless to say, today’s decline doesn’t have anything to do with T-Mobile’s operations, which seem rock-solid. This also isn’t the first time Softbank has sold shares. Exactly five years ago after the acquisition of Sprint, Softbank sold T-Mobile shares in June 2020 in the low-$100 range. T-Mobile’s stock has since doubled, and it’s initiated a growing dividend.
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Billy Duberstein and/or his clients have positions in T-Mobile US. The Motley Fool recommends T-Mobile US. The Motley Fool has a disclosure policy.
