SoftBank Records Significant Losses on its WeWork Investment

Masayoshi Son, the CEO of Softbank, stated recently that SoftBank does not plan to make investments for the purpose of rescue, despite the recent quarterly loss — the first one in 14 years. The company’s latest financing resulted in a significant failure, but there will be no rescue for WeWork. However, he did promise that this debacle will not happen again, and that it should be considered an exception to the company’s usual performance.

'I shut my eyes,' SoftBank CEO Masayoshi Son says after losing more than $4.7 billion on WeWork https://t.co/cmRI2jjRNt

— Business Insider (@businessinsider) November 6, 2019

Softbank’s Investments Have Backfired

Son admitted that his investment strategy was not flawless, and the results clearly show that some mistakes have been made. WeWork and Uber investments led to a significant failure in recent months, and many have started questioning his judgment. Not only that, but the viability of the SoftBank’s Vision Fund has also been brought into question. The company investment into WeWork yielded around $3.4 billion-large writedown (374.7 billion yen), which came only two weeks after the firm took control over 80% of WeWork. To do this, SoftBank invested $5 billion, which was clearly a mistake on the company’s part. The WeWork investment has failed, mostly due to the mounting losses, and public investors’ decision not to fund the business. As a result, WeWork had to give up on the plans to hold an IPO in late September. Meanwhile, SoftBank’s former CEO, Adam Neumann, who left with over $1 billion, got ousted. The company also announced that its new executive chairman would be Marcelo Claure, the company’s operating chief.

Is the Vision Fund Facing Only Failure?

As mentioned, the company’s Vision Fund was also questioned, after deploying over $80 billion in less than three years. The company used the funds for some pretty risky bets, mostly for helping tech firms’ rapid expansion. With rumors that the fund’s portfolio is facing failures, Son said that it is true that problems are surfacing, but the same is true in other portfolio companies. Of course, SoftBank’s ‘problems’ involve massive investment failures such as Wag, which is planning to sell the firm, and Uber, which saw its stock drop 40% after an IPO held in May. However, Son pointed out that there are also quite a few successful projects, such as Slack, which earned over five times the amount that was invested in it. Other successful firms also include 10x Genomics, and Guardant Health. Do you think that SoftBank’s investments are risky and reckless? Let us know in the comments below.

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