SoftBank Losses From WeWork, Uber Failed IPOs Top $5B

Analysts are starting to weigh in on the mounting damages SoftBank could incur after such mishaps as WeWork and Uber, Bloomberg reported on Monday (Oct. 7).

SoftBank’s Chief Executive Officer Masayoshi Son may have led the global technology conglomerate to some $5.4 billion in losses, analysts concluded.

Estimated profits for SoftBank’s Vision Fund, its central investment arm, were slashed by $5.4 billion to an operating loss of $3.44 billion for the September quarter, according to Mitsubishi UFJ Morgan Stanley Securities Co.

Stock market pricing dips at Uber and Slack, combined with the botched WeWork IPO, are the main reasons for the setback. Vision Fund’s write-down could be as much as $5.93 billion, Sanford C. Bernstein & Co. estimated. SoftBank’s stake in WeWork could account for another $1.24 billion drop.

“Profits in the [SoftBank Vision Fund] segment may still see considerable volatility ahead,” said Mitsubishi UFJ Analyst Hideaki Tanaka.

Son himself just said that he isn’t impressed with his company’s accomplishments. “The results still have a long way to go, and that makes me embarrassed and impatient,” he said in an interview on Tuesday (Oct. 8). “I used to envy the scale of the markets in the U.S. and China, but now you see red-hot growth companies coming out of small markets like Southeast Asia. There is just no excuse for entrepreneurs in Japan, myself included.”

While Son has turned SoftBank into a global technology conglomerate through successful investments, including Alibaba Group Holding, other investments have struggled this year. As a result, the Japanese billionaire’s track record has been tainted, and SoftBank’s shares have fallen 31 percent since April.

Son must deal with SoftBank’s biggest disappointments so far this year: Uber and WeWork, which have prompted concerns about China’s Didi Chuxing, India’s Ola and Singapore’s Grab.

The two big setbacks erased the gains of SoftBank’s record $5.5 billion buy-back eight months ago. However, though WeWork and Uber are struggling now, they will be substantially profitable in 10 years’ time, Son noted. Still, he has cautioned SoftBank portfolio company heads.

“Recently, I’ve been telling founders to ‘know your limit,’” Son said. “Knowing your limitations will help unleash limitless possibilities.”