WeWork Investment Cost SoftBank $14.3B in Total Accumulated Losses
SoftBank saw $14.3 billion in accumulated losses as a result of its investment in the recently collapsed WeWork.
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SoftBank, the majority stakeholder in WeWork, suffered $14.3 billion in cumulative losses. For the latest quarter, the Japanese investment giant reported $1.6 billion in losses related to WeWork. However, its renowned Vision Funds delivered positive performance thanks to Arm’s IPO and returned to profitability for the first time in six quarters.
WeWork Files for Bankruptcy
Earlier this week, WeWork, a coworking space provider that was once valued at almost $50 billion, filed for Chapter 11 bankruptcy protection.
The bankruptcy market is one of the most remarkable corporate collapses in recent US history. One of the factors that led WeWork to its demise was the rapid U-turn in the post-pandemic era, as numerous companies renting WeWork’s offices abruptly ended their leases. Furthermore, the following economic downturn forced even more companies to do the same.
In 2019, WeWork attained a whopping $47 billion valuation in a funding round led by Japanese investment giant SoftBank. This was after WeWork attempted to go public but failed.
In fact, SoftBank is a majority stakeholder in WeWork, with its cumulative losses in the collapsed firm hitting $14.3 billion. On Thursday, SoftBank reported a net loss of $6.2 billion in the quarter ended September 30, marking the conglomerate’s fourth consecutive quarter of negative profitability.
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SoftBank Enters ‘Investing Mode’
During the six months through September, SoftBank said it posted $1.6 billion in losses related to investment and financial aid for WeWork. And although its breakdown was a big blow for Masayoshi Son’s SoftBank, the Tokyo-based investment titan remains focused on future opportunities.
“We have entered an investing mode. We have plenty of cash so we are ready for big positions.”
– SoftBank’s CFO Yoshimitsu Goto said
The holding company’s net asset value grew to $109 billion at the end of September, up from $103 billion at the end of June. The boost comes in part due to a weaker yen, Goto added.
In addition, SoftBank gained $2.4 billion in the most recent quarter following a sale in its UK chipmaker Arm, which also reported its financial results on Wednesday. Meanwhile, Goto said SoftBank does not expect further negative impacts from WeWork as the conglomerate has already devalued the investment.
When do you think SoftBank will manage to return to profitability? Let us know in the comments below.
Tim Fries
Tim Fries is the cofounder of The Tokenist. He has a B. Sc. in Mechanical Engineering from the University of Michigan, and an MBA from the University of Chicago Booth School of Business. Tim served as a Senior Associate on the investment team at RW Baird's US Private Equity division, and is also the co-founder of Protective Technologies Capital, an investment firm specializing in sensing, protection and control solutions.
