SoftBank reports $8.9 billion loss in second quarter due to Vision Fund
Softbank Group Corp reported its second quarter profits, detailing a loss of 970 Billion Yen ($8.9 billion) on Vision Fund due to falling valuations of top tech bets like Uber and WeWork.
The accounted loss is reported to be Softbank’s first quarterly loss in over 14 years. Founder Masayoshi Son’s strategy of investing in cash-burning startups, his second massive investment fund still in a startup, has been put in bad light as interested investors ultimately doubt its success.
Overall, the Japanese investment powerhouse accounted an operating loss of 704 Billion Yen ($6.5 Billion) in the second quarter, July to September. In last year’s second quarter report, the company reported a profit of 706 billion yen and a 48 billion loss forecast by analysts.
Last month, Softbank spent over $10 Billion to bail out WeWork after its IPO attempt flopped. Softbank’s investment in WeWork’s fair value fell by $3.4 billion in the July to September quarter.
Saudi Arabia-backed Vision Fund has invested $70.7 billion in 88 companies by late September. The investments now run at $77.6 billion excluding exits, according to the company.
Softbank is struggling after investors doubt the company’s profitability and success in startups. With the increase of market scrutiny, Softbank struggles to take Vision Fund to the market, which is a primary step to keep investment going.
Most of the fund’s listed investments fell in value, such as Uber, Slack Technologies, and Guardant Health.
At Uber, losses continue to mount as shares hit new lows this week.
The investing activities of Softbank are supported by Son’s other businesses, such as domestic telco Softbank Corp, which reported a 9% rise in profit. The reported increase beat analyst estimates, attributed to its cash-cow mobile business.
Softbank did not release this current business year forecast due to many uncertain factors, according to the company.