'I shut my eyes,' SoftBank CEO Masayoshi Son says after losing more than $4.7 billion on WeWork

Kim Kyung-Hoon/ReutersSoftBank CEO Masayoshi Son

  • SoftBank lost at least $US4.7 billion by investing in WeWork after the shared-workspace group’s IPO collapsed and its valuation plunged from $US47 billion in January to below $US10 billion.
  • “My own investment judgment was really bad. I regret it in many ways,” CEO Masayoshi Son said at a news conference, according to the Wall Street Journal.
  • SoftBank reduced its overall valuation of WeWork to $US7.8 billion.
  • Watch SoftBank trade live.

SoftBank lost at least $US4.7 billion by investing in WeWork after the shared-workspace group’s IPO collapsed and its valuation plunged from $US47 billion in January to below $US10 billion.

In an earnings filing on Wednesday, the Japanese conglomerate slashed its estimated valuation of the embattled startup to $US7.8 billion as of the end of September.

The WeWork writedown fuelled an $US8.9 billion operating loss at SoftBank’s Vision Fund and Delta Fund in the second quarter – a sharp swing from their $US3.6 billion profit in the same period last year. The upshot was an overall operating loss of $US6.5 billion.

‘I regret it’

SoftBank CEO Masayoshi Son shouldered the blame for the weak results, according to the Wall Street Journal. “My own investment judgment was really bad. I regret it in many ways,” he said at a news conference.

Son also admitted to overlooking the controversial behaviour of WeWork cofounder and former CEO Adam Neumann, who leased properties to his company, charged it nearly $US6 million for the “We” trademark, and raised $US700 million by selling and borrowing against company stock.

“I shut my eyes to a lot of his negative aspects,” Son said, according to the Journal.

SoftBank agreed a $US9.5 billion rescue package with WeWork last month in exchange for an 80% stake in the ailing business. The deal includes $US1.5 billion in warrants, up to $US3 billion in stock purchases, and $US5 billion in debt financing. The company didn’t assess the financial impact of the funding agreement in its latest earnings.

SoftBank has invested a total of $US10.3 billion in WeWork, comprising $US6 billion from a wholly owned subsidiary and $US4.3 billion from its Vision Fund. It cut the estimated value of the subsidiary’s stake by $US4.7 billion to $US1.3 billion, and more than halved the value of the Vision Fund’s investment to $US2.1 billion.

Son told colleagues “we created a monster” in WeWork by investing billions only to end up bailing it out, the Financial Times reported.

Business Insider Emails & Alerts

Site highlights each day to your inbox.

Follow Business Insider Australia on Facebook, Twitter, LinkedIn, and Instagram.