Uber and WeWork damage could cost SoftBank $5 billion
Masayoshi Son entrepreneurs have had only a few months, from the sumptuous initial public offering of WeWork to a sharp decrease in Uber Technologies Inc. Analysts are now starting to predict that there will eventually be billions of dollars in losses to Son’s SoftBank Group Corp.
UFJ Mitsubishi Morgan Stanley Securities Co. lowered its revenue outlook for its primary vehicle for capital investment, the SoftBank Vision Fund, by ±580 billion ($5.4 billion) to the September quarter’s operating loss of € 366.6 billion, representing losses in the stock prices of Uber and Slack Technologies Inc.
After repositioning SoftBank from a mobile company into a venture conglomerate, Son is going through an especially challenging phase and has shares in many companies all over the world.
With tactical bets on companies such as China’s e-commerce firm Alibaba Group Holding Ltd, he has developed his fortune of around $14 billion. Nonetheless, the recent problems have weighted SoftBank stocks, pushing them down nearly 30 per cent from their height earlier this year while investors were skilful about product valuations.
“Profits in the business (SoftBank Vision Fund) can still see considerable uncertainty ahead,” writes UFJ analyst Hideaki Tanaka, Mitsubishi.
In an interview with the weekly Nikkei News, Son said he is disappointed with how far his successes have sunk.
“The tests are still a long way away, which leaves me disappointed and frustrated,” said Son. “I used to admire industry size in the U.S. and China, but now, like in Southeast Asia, red-hot expansion companies are emerging from small markets. There is no reason for Japanese business people, including myself. The strategy is to invest in companies that share his dream that a future is being re-designed by artificial intelligence, he said.
WeWork and Uber may lose money now, but in ten years they will be very profitable, Son said in an interview.
Late last month, during a private retreat for portfolio companies, he had another message: soon to be profitable. Son has emphasised the importance of good governance at the five-star Langham resort in Pasadena, California. Days later SoftBank pushed WeWork’snotorious co-founder, Adam Neumann, out of office.