SoftBank Group Corp - ADR (OTC: SFTBY) bets big on unicorns, but not all of them can fly.
Masayoshi Son, chairman of the Japanese conglomerate, reported a $6.5-billion loss on Wednesday — more than three times what analysts had forecasted.
WeWork alone cost $4.6 billion. In October, SoftBank expanded its ownership of the floundering co-working space to 80% with a $9.5-billion package.
Notably, the move did not secure SoftBank a majority of voting rights, but it did catalyze change: turnover in board leadership.
“Son’s handling of WeWork raises some fundamental questions about his investment strategy that need to be addressed,” Jefferies Group senior analyst Atul Goyal said ahead of the earnings release, according to Bloomberg.
“There will be more failed investments in the future, how does he plan to handle them?”
SoftBank also reported unrealized losses of about $4.9 billion, slightly less than analysts had expected.
Its Vision Fund, representing the largest portfolio of startups in the world, lost $8.9 billion. The fund’s 88 investments were still worth more than their acquisition costs.
“There was a problem with my own judgment, that’s something I have to reflect on,” Son said.
Prior to this quarter, SoftBank had turned investments into $14 billion in gains since 2017.
Over-the-counter SoftBank ADR shares last traded down 0.1% at $19.50.
Photo courtesy of WeWork.