Softbank defiant as WeWork triggers loss

Bloomberg

Masayoshi Son struck a defiant tone after his SoftBank Group Corp reported an enormous loss from investments in money-losing startups WeWork and Uber Technologies Inc.
The Japanese billionaire paced a stage in Tokyo showing off dozens of slides that he argued demonstrate the promise of his deal-making. He began by flashing a slide of newspaper headlines and mocking reports that SoftBank or WeWork or both would end up going bankrupt.
“There was a problem with my own judgment, that’s something I have to reflect on,” he said, looking more sober than usual in gray suit, white shirt and pink tie. “But let me explain the facts.”
SoftBank recorded an operating loss of 704.4 billion yen ($6.5 billion) after writedowns in WeWork and other investments, the Japanese company’s first such loss in 14 years. The $100 billion Vision Fund, the unprecedented investment fund that had been producing big profits, lost 970.3 billion yen. “Today’s earnings are a mess,” Son said. “It’s red all over.”
The company’s founder quickly shifted to defend his approach, highlighting the potential of his technology investments and boasting about his returns compared with traditional venture capitalists. He made it crystal clear that he has no plans to back off a strategy that has rattled Silicon Valley and raised concerns of a bubble in startup valuations. Indeed, he said that fundraising for a second Vision Fund is on track and the fund will debut soon. “There is no change in our journey, no change in our vision,” Son said.
That certitude may rattle investors given the WeWork fiasco. SoftBank and the Vision Fund had invested more than $10 billion in the co-working giant ahead of its planned initial public offering in September, pushing its valuation as high as $47 billion. But investors balked at buying shares in the money-losing startup and WeWork pulled its IPO.
That left the company desperate for cash, prompting SoftBank to extend a $9.5 billion rescue package and take an 80% stake in the company. WeWork’s valuation sank to less than $8 billion in the bailout. SoftBank shares are down 28% from their peak this year.
“The explanation for the massive rescue for WeWork was unsatisfying,” said Mitsushige Akino, an officer at Ichiyoshi Asset Management.