SoftBank faces $5.2 billion quarterly loss amid WeWork woes
A man looks at the logo of SoftBank Group Corp at the company's headquarters
SoftBank Group reported a $5.2 billion quarterly loss on Thursday, marking its fourth consecutive quarter in the red. According to Reuters, the Japanese conglomerate, led by founder Masayoshi Son, grappled with the aftermath of the WeWork tragedy, once considered one of its most promising investments.
WeWork, the office-sharing start-up that once boasted a valuation of $47 billion, filed for U.S. bankruptcy protection on Monday, underscoring the challenges inherent in SoftBank's strategy of placing substantial bets on often precarious start-ups.
The financial results revealed a stark contrast from the previous year, with SoftBank reporting a net loss of 789 billion yen ($5.2 billion) for the three months ending in September. This downturn followed a 3.0 trillion profit a year earlier, when the company sold a significant portion of its stake in Chinese e-commerce giant Alibaba.
Notably, SoftBank recorded losses amounting to 234.4 billion yen in the first half of the year, directly linked to its exposure to WeWork's financial troubles.
Reuters cited Chief Financial Officer Yoshimitsu Goto, who expressed regret over WeWork's bankruptcy, labelling it a "great shame" at a briefing. Goto acknowledged the necessity for SoftBank to analyse and learn from the WeWork situation to enhance its future investment decisions.
However, he maintained a degree of optimism, stating that he believed SoftBank had "hit the bottom" and was on a path towards profitability. Goto identified chip designer Arm, which went public during the quarter, as the potential catalyst for SoftBank's recovery, recording a capital surplus of $4.65 billion from the listing's proceeds.
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After a defensive posture in recent times, SoftBank signalled a shift back to a more active investing role, particularly focusing on artificial intelligence. Goto outlined the company's intention to engage in more proactive investment activities, indicating a strategic pivot in response to the challenges faced in the wake of WeWork's downfall.
(With inputs from Reuters)
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