WeWork and Uber drag SoftBank Group into historic negative territory

After We Work gaffe Softbank's Son takes cautious approach to Uber Slack IPOs

SoftBank experienced huge losses during the recent quarter from plummeting valuations on investments in Uber and WeWork.

SoftBank reported its first quarterly loss in 14 years on Wednesday, whiplashed by an $8.9 billion hit at its giant Vision Fund and marking a rare, humbling moment for CEO Masayoshi Son over his.

SoftBank CEO Masayoshi Son won't call WeWork a rescue, saying instead that the latest financing allowed his company to dramatically reduce the average share price it paid for the coworking company.

Son said that the fund had posted $11 billion profit since its inception in 2017, even after this quarter's losses, the Wall Street Journal reported.

Various negative media reports about WeWork were "true in some sense", Son said. At the same time, the prior $47 billion valuation of WeWork by SoftBank has been cut by one-tenth, while the total investment by SoftBank entities in WeWork now tops $10 billion.

Son was also intent on making clear that SoftBank has a "no bailout" policy and there won't be any other rescues among the companies it invests in. He added that WeWork could generate $1 billion in annual profit in a few years and that the business in Japan is already making money.

WeWork can be fixed - and there's a plan, according to SoftBank Group Corp., which offered the cash-strapped, unprofitable office-sharing company a lifeline in exchange for majority ownership.

Vision Fund I posted an $8.8 billion investment loss last quarter.

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In Singapore, CapitaLand Commercial Trust said in July it will lease out 21 Collyer Quay, a 21-storey building in the financial district now occupied by HSBC Holdings, to WeWork. He said the situation at WeWork was under control, and he expects to turn it around.

Still, he defended the Vision Fund's overall performance and said he is planning another $100 billion fund, claiming that investors in the first fund are keen to participate again.

Some analysts questioned Mr Son's bullish outlook on WeWork's recovery plan. The company invested $70.7 billion in 88 companies as of the end of September and those investments are now worth $77.6 billion.

Son said he had learned several lessons from the episode - that he had put too much faith in WeWork founder Adam Neumann and that startups needed to have solid governance and a path to profits. As SoftBank's Marcelo Claure takes over as chairman of WeWork, the startup will get rid of unprofitable businesses, cut expenses in half and halt new building developments.

"I am looking back with true regret about the mistaken investment moves that I have made".

Shares in ride-hailing app Uber Technologies have fallen by more than a third since its listing.

Below questioning from journalists on Wednesday, Son justified the categorisation and financial investment in WeWork owing its featuring of business house to AI corporations, as effectively as previously acquiring ideas for AI that it no longer designs to pursue. The second Vision Fund is on track to close soon, he said.

"I learned a harsh lesson and I should have known better", Son said.

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