SoftBank founder calls his judgment ‘really bad’ after $4.7B WeWork loss
TOKYO • The implosion of SoftBank’s outsize investment in U.S. office-sharing company WeWork left the Japanese conglomerate and its massive tech-investment fund with billions of dollars in write-downs and the biggest quarterly loss in its 38-year history.
Standing in front of a giant screen projection of stormy seas and dire Japanese-language headlines, SoftBank founder and Chief Executive Masayoshi Son said in Tokyo that he had made serious errors in judgment that led the group to post earnings “of the deepest red.”
SoftBank and the Vision Fund wrote down the value of their WeWork stakes by $4.7 billion and $3.5 billion, respectively.
The $100 billion Vision Fund also wrote down the value of its holdings in U.S. ride-hailing giant Uber and around 20 other investments, leading to an operating loss — the fund’s first — of nearly $9 billion in the quarter, and a group-wide net loss of $6.4 billion.
“My own investment judgment was really bad. I regret it in many ways,” Son said.
Son is fighting to preserve his reputation as one of the world’s savviest and most influential tech investors following the spectacular collapse of one of his most prized portfolio companies, and the tumble in value of several others.
WeWork lost almost $40 billion in value after an attempt to go public backfired a few months ago amid widespread skepticism about its profitability and management.
All told, SoftBank and the Vision Fund have plowed nearly $20 billion in debt and equity into WeWork, yet value the company at less than half that, at $7.8 billion.
SoftBank had recently stepped in with a $9.5 billion bailout that boosted the group and Vision Fund’s stake in WeWork to 80%.
The collapse was particularly embarrassing for Son because he had pushed for the investment in WeWork — which before the October bailout had totaled more than $10 billion — and championed its founder, Adam Neumann. Son said he had been too enamored of Neumann’s positive qualities and turned a blind eye to negatives, including problems of governance.
Son pledged never to mount another rescue of a portfolio company and said SoftBank and the Vision Fund were now using the ability to turn a profit in the future as the premier yardstick for measuring the value of its investments. He said the group is working on guidelines to ensure good governance at its portfolio companies.
Yet Son also mounted a spirited defense of the Vision Fund’s overall performance and outlook, saying that despite last quarter’s write-downs the fund still had investment gains of $11 billion since its inception in 2017. Son said the Vision Fund’s return was well north of 13%.
Son also said his plans for a second Vision Fund of around the same size as the first remained on track, despite the WeWork mess.
SoftBank CEO Masayoshi Son in Tokyo on Wednesday in front of characters reading “red ink.”