SoftBank suffers $5.2 billion loss from WeWork bankruptcy

SoftBank Group announced a quarterly loss of $5.2 billion on Thursday, marking its fourth consecutive quarter in the negative. The Japanese conglomerate took a hit due to the fallout from the bankruptcy of WeWork, once one of its highest-flying investments.

The news comes six months after SoftBank posted a record $32 billion loss at its Vision Fund venture arm. The Japanese giant had reported another $50 billion six months earlier. The latest loss is as a stark reminder of the inherent unpredictability in founder Masayoshi Son’s approach to making significant investments in often uncertain start-ups.

WeWork, once valued at an impressive $47 billion with ambitions to revolutionize global commercial real estate. WeWork, a once-celebrated co-working unicorn startup, filed for Chapter 11 bankruptcy protection in New Jersey on Thursday following years of struggles that started with a failed IPO in 2019. The bankruptcy is a significant downfall from its earlier success.

SoftBank reported a net loss of 789 billion yen ($5.2 billion) for the three months ending in September, a stark contrast to the 3.0 trillion profit from a year prior, when it divested a substantial portion of its stake in the Chinese e-commerce giant, Alibaba. The company faced losses of 234.4 billion yen linked to its involvement with WeWork in the first half of the year, Reuters reported.

During a briefing, Chief Financial Officer Yoshimitsu Goto expressed disappointment over WeWork’s bankruptcy, acknowledging the necessity for the company to understand what went wrong to guide future investment decisions. Nonetheless, Goto shared a positive outlook, stating his belief that SoftBank had reached its lowest point and was now on track toward achieving profitability.

Founded in 1981 by Masayoshi Son in September, the Tokyo, Japan-based SoftBank is a multinational telecommunications and internet corporation focused on broadband, fixed-line telecommunications, e-commerce, internet, technology services, finance, media, marketing, and other businesses. Softbank is the sixth-largest telephone operating company with a total revenue of $74.7 billion. The company has invested in a lot of startups including Uber.

Softbank Vision Fund has stakes in the following companies: Arm Holdings, Fortress Investment Group, Boston Dynamics, Sprint (85%), Alibaba (29.5%), Yahoo Japan (48.17%), Brightstar (87.1%), Uber (15%), Didi Chuxing (ca.20%), Ola (ca.30%), Renren (42.9%), InMobi (45%), Hike (25.8%), Snapdeal (ca.30%), Fanatics (ca.22%), Improbable Worlds (ca.50%), Paytm (ca.20%), OYO (42%), Ping An Insurance (7.41%)[6], Slack Technologies (ca.5%), WeWork (ca.80%), ZhongAn Online P&C Insurance (5%), Compass (ca.22%), AUTO1 Group (ca.20%), Wag (45%), Katerra (ca.28%), Cruise Automation (ca.19.6%), ParkJockey[7], Tokopedia (Indonesia), and many more