Skip to main content

Market Overview

SoftBank Facing Record Losses As Startup Investments Fail To Deliver

Share:
SoftBank Facing Record Losses As Startup Investments Fail To Deliver

SoftBank Group Corp. (OTC: SFTBY) is forecasting record losses for the financial year that ended March 2020, as its Vision Fund and other investments flounder.

What Happened

The Japanese conglomerate is projecting its first operating loss in 15 years. SoftBank’s $100 billion Vision Fund is expected to clock a loss of 1.8 trillion yen ($16.5 billion) as its startup bets fail to deliver, putting the entire group’s earnings under pressure. 

In a statement, the group said the losses in the Vision Fund arose because of “a decrease in the fair value of investments due to the deteriorating market environment.”

SoftBank’s projected annual net loss stands at 750 billion yen ($7 billion).

Why It Matters

The Vision Fund has recorded its third consecutive quarterly loss as bets like the co-working space company WeWork and cab aggregator Uber Technologies Inc. (NYSE: UBER) had to be written off. 

SoftBank’s own investments outside of the Vision Fund have taken an 800 billion yen ($7.4 billion) hit, according to the company’s earnings forecast. 

CEO Masayoshi Son’s personal guarantee of $2 billion, given to OYO Hotels & Homes founder Ritesh Agarwal to buy back shares in OYO, is also under the scanner. SoftBank had vowed to refrain from bailing out struggling startups.

WeWork sued SoftBank after it refused to purchase WeWork’s shares, citing non-compliance with terms of the agreement between the two companies.

The group's dismal investment record has attracted activist investor interest, with Elliot Management Corp. taking a substantial stake in the Group and forcing SoftBank to initiate share buybacks to the tune of $41 billion last month.

Price Action

SoftBank’s OTC stock fell 3.97% to $18.63 on Monday. The company’s shares traded 2.19% higher at $39.90 at press time in Tokyo. 

 

Related Articles (SFTBY + UBER)

View Comments and Join the Discussion!

Posted-In: Elliot Management Corp Masayoshi Son SoftBank Vision FundEarnings News Financing Management Global Best of Benzinga

Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Premarket Activity
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Fintech Focus
A daily collection of all things fintech, interesting developments and market updates.
SPAC
Everything you need to know about the latest SPAC news.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com