Softbank sees wider loss of $8.4 billion on Wework writedown
Softbank Group Corp. forecast a net loss for the fiscal year ended in March of 900 billion yen ($8.4 billion), revising its prediction from about two weeks earlier largely because of a deterioration in the business of office-sharing start-up Wework.
The Japanese company made the announcement in a statement Thursday, citing more than 1 trillion yen of non-operating losses from investments held outside of its $100 billion Vision Fund. It had previously said its net loss would total about 750 billion because of writedowns in the value of investments both inside and outside the Vision Fund.
Founder Masayoshi Son has been struggling with the impact of the coronavirus on the portfolio of start-ups he has backed in recent years, from Wework to Uber Technologies.
Companies such as Brandless have shut down, while others like Zume Pizza have laid off workers and revised business plans. Satellite operator Oneweb filed for bankruptcy last month.
Son bet heavily on the socalled sharing economy, in which start-ups help people split the use of cars, offices and homes. Those businesses have been hammered by the pandemic that has discouraged much direct human interaction.
Softbank is scheduled to report final earnings for the fiscal year on May 18. SoftBank shares rose 2.9 per cent in Tokyo trading, in line with the Japanese stock market.
“Son is getting the bad news out there, and the market seems to approve,” said Justin Tang, head of Asian research at United First Partners. “Everyone is looking forward to a lifting of lockdowns and easing back to normality. It also helps that Softbank is out there buying its own shares.”