Corp. Chief Executive Officer Masayoshi Son speaks during a joint announcement with Toyota Motor Corp. to make new venture to develop mobility services in Tokyo, Japan, 04 October 2018.
Alessandro Di Ciommo | NurPhoto | Getty Images
SoftBank Founder and CEO Masayoshi Son said he was “foolish” in the firm’s multi-billion investment in WeWork in an earnings presentation Monday.
The comments come as SoftBank gave WeWork a valuation of $2.9 billion as of March 31 based on a discounted cash flow method, down from $7.3 billion as of December 31, 2019 following its failed IPO. SoftBank has reportedly invested $18.5 billion in the company, according to a comments leaked in October from WeWork’s chairman. WeWork’s private valuation was as high as $47 billion before its botched IPO last year.
WeWork was not immediately available to comment.
SoftBank had long been heralded for its savvy and splashy investments. The firm built its name on a massively successful bet on Chinese tech giant Alibaba. But SoftBank’s reputation began taking hits last year when two of its Vision Fund portfolio companies, Uber and WeWork, revealed massive losses in their filings to go public. WeWork’s bid to go public ultimately flopped when the company pulled its IPO filings following persistent criticism about its financial hits and unusual corporate governance structure.
SoftBank’s $2 billion funding round in January 2019 valued WeWork at $47 billion ahead of its bid to go public. Prior to the IPO filing, the company was expected to seek a valuation as high as $100 billion. That number slowly crept down as investors and analyst dug into its financials.
WeWork’s business could suffer even greater losses now that the coronavirus pandemic has made co-working a potentially dangerous activity. With many workers adjusting to their home offices, some companies are reconsidering their needs when it comes to office space altogether.
The Vision Fund posted $18 billion in losses compared to $13 billion in total annual losses for SoftBank Group overall. The $100 billion fund was created to make large bets on companies and infuse them with cash. Of the 88 companies the Vision Fund has invested in, Son predicted Monday about 15 of those companies will be successful, while 15 could go bankrupt in the midst of the pandemic.
Son announced Monday that Alibaba founder Jack Ma will also be stepping down from SoftBank’s board effective June 25.
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