SoftBank's Bad Bet on WeWork and Big Earnings Loss

SoftBank Group, the largest tech investor globally, reported its first quarterly loss in 14 years on Wednesday.
"My own investment judgment was really bad," SoftBank CEO Masayoshi Son said in a press conference after the company announced it lost $4.7 billion on its investment in WeWork. "I regret it in many ways."
The company revealed that its investments in startups like WeWork and Uber cost the company nearly $6.5 billion just in operating losses this quarter.
"When you look at where [SoftBank] is trying to go in the business, they’ve said in investor conferences before that they’re guiding SoftBank forward on this idea to transition the company from a telecommunications operator to a strategic holding company," senior analyst at The Motley Fool Jason Moser told Cheddar.
SoftBank launched The Vision Fund in 2017 to operate as an investment arm of the company. The Vision Fund used its $100 billion fund to invest in companies like Uber ($UBER), WeWork, Slack ($WORK), and TikTok. Some of Son’s investments were in tech companies struggling to become profitable, which impacted the company’s financials.
Investors are watching SoftBank’s investments closely as Son is in the process of raising money for the second Vision Fund.
WeWork has been in trouble all year. What began as a promising initial public offering became an ousting of the company’s CEO, a valuation loss, and a delayed IPO. WeWork held off on going public when investors expressed concern about the company’s profitability and leadership.
The Japanese conglomerate then bailed out WeWork as it took control. The office share company's valuation plummeted from $47 billion in January to about $7.8 billion at the end of September, and its CEO Adam Neumann stepped down at the end of September.
Though Son remained a big WeWork supporter even as other investors expressed concern, The New York Times reported Vision Fund partners resisted the notion of continuing to fund the startup even while Son persisted in investing money. The company’s investments totaled $10.5 billion ahead of the planned public offering.
"I think [Masayoshi] Son has a history of being a big risk-taker. Perhaps it’s time for him to take a page out of Abraham Lincoln’s book and surround [himself] with a team of rivals — people who are going to think differently than you and ask questions," Moser said. "That could have kept the WeWork debacle from getting where it is today."
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