SoftBank's operating loss in the third quarter of 2019 was 704.4 billion yen (US $ 6.5 billion). Meanwhile, analysts' estimates were 230.8 billion yen and last year's profit was 705.7 billion yen. Vision Group of the group also "lost" 970.3 billion yen in 3 months, ending on September 30, because of a decrease in the value of investments. The fund's unspecified loss in its investments in Uber to WeWork was 537.9 billion yen, with 497.7 billion yen in the decrease in investment value. Analysts have predicted that this loss will be about $ 5 billion to $ 7 billion.
So far, Vision Fund has acted as a driving force for profit growth at SoftBank, contributing more than $ 14 billion to the majority of the company's paper profits over the past two years. Now, these losses have raised questions about Masayoshi Son's investment strategy, even as he is trying to deploy another fund more valuable than Vision currently. The failure of Uber and WeWork – once one of the brightest "stars" in the "constellation" SoftBank, was also the reason why the Vision Fund's portfolio had to decline.
Masayoshi Son's asset value plummeted because of Uber and WeWork.
Recently, the chairman of SoftBank gave an explanation for his failed investment decisions. He sadly shared: "My own judgments are problematic, that's what makes me ponder."
Atul Goyal, senior analyst at Jefferies Group, commented on SoftBank's financial statements: "The Masayoshi Son 'helping' WeWork asked basic questions about his investment strategy. There will be many failed investment deals in the future, so how will he solve them? "
Late last month, SoftBank launched a $ 9.5 billion "bailout" package for WeWork, which left 80% of start-ups sharing office space in the hands of a Japanese company. Before that, SoftBank and Vision Fund had poured 10 billion USD into this "unicorn". However, SoftBank's stake here does not have a majority voting power, which means that WeWork is only considered an associate, not a subsidiary.
Evolution of 3 stocks in the portfolio of Vision Fund.
The agreement with SoftBank, which includes $ 5 billion for new capital and accelerates the pace of the current commitment to $ 1.5 billion, will provide a subsidy to parent company We Co. WeWork founder Adam Neumann will leave the company's board of directors with a bailout fund, replaced by SoftBank's newly appointed CEO Marcelo Claure. Although Neumann has gone away with a disappointing failure of a potential start-up, he is still a billionaire thanks to his stake here.
WeWork, once a potential start-up and priced at "in the sky," is now "surrendering" and accepting the "emergency relief" package. This is one of the most significant "catastrophes" in the business sector recently. 2 months ago, this company still plans to IPO with high valuation "overwhelmingly". However, investors have raised many questions before their irrational management structure and their fast burning speed. According to the IPO, WeWork lost $ 900 million in just the first half of this year.