Softbank warns of historic $16.7bn loss after coronavirus and bad bets
Softbank expects to lose $16.7bn (£13.3bn) on tech startups it has invested in through its Vision Fund this year due to coronavirus.
The Japanese company blamed the coronavirus pandemic for a “deteriorating market environment” as it booked its first loss in over 20 years.
Softbank has also made some bad bets outside its $100bn Vision Fund that has seen the fund’s valuation drop markedly over the last year.
Those include Wework, the real estate firm that shelved plans for an IPO and sacked its founder last year, and the bankrupt internet satellite startup OneWeb.
Uber, and other Softbank Vision Fund investments like Uber’s Asian rival Grab, and Indian hotel chain Oyo, have suffered amid the coronavirus lockdown.
They are particularly exposed to consumer spending, which has been affected worldwide by travel bans and lockdowns to combat coronavirus.
Uber is trading well below its 2019 initial public offering (IPO) price, and Softbank is embroiled in a legal battle with Wework after the Japanese firm abandoned a further $3bn investment.
Softbank’s Vision Fund losses are “much worse than expected; consensus was still expecting an operating profit for the year,” CLSA analyst Oliver Matthew wrote in an investor note.
“Much of the damage to the (Vision Fund) credibility has already occurred with the very public failed WeWork float,” Dan Baker, a Morningstar analyst, told CNN.
SoftBank founder and CEO Masayoshi Son last month announced a sale of $41bn of assets to slash Softbank’s huge debt pile.
While he is still pushing on with a second Vision Fund, it is likely to be smaller after the failures of the first.
“I think that our next fund size should be a little bit smaller, because we have caused concerns and anxiety to a lot of people,” Son said.