SoftBank reveals $6.5b loss from Uber, WeWork turmoil
LOSSES CALL INTO QUESTION FOUNDER SON’S DEAL-MAKING APPROACH The shrinking valuation of Uber and WeWork, once among the brightest stars, raises the prospects of more write downs.
Masayoshi Son is finally disclosing the damage from SoftBank Group Corp’s bets on WeWork and Uber.
The Japanese investment powerhouse yesterday reported its first quarterly operating loss in 14 years — about $6.5 billion -after writing down the value of a string of marquee investments. It swallowed a charge of 497.7 billion yen ($4.6 billion) for WeWork, whose spectacular implosion turned the once high-flying shared-office startup into a Silicon Valley punchline.
The losses call into question the billionaire founder Son’s deal-making approach just as he’s trying to raise an even larger successor to his $100 billion Vision Fund. The investment vehicle had been a driver of profit growth at SoftBank, contributing over $14 billion in mostly paper gains over the past two years. Now, the shrinking valuation of Uber and WeWork, once among the brightest stars in the SoftBank constellation, raises the prospects of more write downs in the Vision Fund’s portfolio with its high exposure to businesses that prioritise growth over profitability.
Yesterday, SoftBank’s chairman took some blame for his
■ poor decisions. “There was a problem with my own judgement, that’s something I have to reflect on,” said an unusually sombre Son.
The operating loss was 704.4 billion yen in the three months ended September 30, the Tokyo-based company said. That easily surpassed the 230.8 billion yen average of analysts’ projections, and compared with a 705.7 billion yen profit a year earlier. Its signature Vision Fund — the world’s single largest pool of start-up investments — reported a 970.3 billion yen loss in the quarter. SoftBank said the fund’s 88 investments were worth about $77.6 billion,
Charged swallowed by SoftBank over WeWork (in yen)
Loss suffered by SoftBank’s Vision Fund in the quarter a 9.8 per cent gain in value relative to the cost at which it acquired the stakes. The company reported a gain in valuation for 25 companies.
SoftBank reported 537.9 billion yen of unrealised losses in a plethora of investments from Uber to WeWork.