Masayoshi Son wants investors to believe that a record loss from investments in money-losing startups WeWork and Uber Technologies Inc. is but a bump in the road. SoftBank Group Corp.'s shares fell as much as 4.2 percent in Tokyo trading on Thursday morning, the biggest intraday decline in about six weeks. The conglomerate recorded an operating loss of ¥704.4 billion ($6.5 billion) after writedowns in WeWork and other investments, its first such loss in 14 years and the biggest quarterly shortfall ever. The $100 billion Vision Fund, the unprecedented investment vehicle that had been producing big profits, lost ¥970.3 billion. At a briefing in Tokyo on Wednesday, the billionaire admitted that "earnings are a mess."
SoftBank Group Corp. is preparing to take at least six more of its portfolio companies public this year, building on a 2020 turnaround that pushed the value of Masayoshi Son's technology conglomerate to the highest since the dot-com boom. Among the startups heading for initial public offerings are South Korean e-commerce pioneer Coupang Corp., Indonesian online mall operator PT Tokopedia and China's ride-hailing giant Didi Chuxing, according to people familiar with the matter, asking not to be named because the matter is private. The IPOs could give Son another round of enormous gains after successful offerings from DoorDash Inc. and KE Holdings Inc. in 2020. Son started last year under a cloud after the meltdown at WeWork, then saw his shares plunge with the coronavirus pandemic and a loss of almost $18 billion at SoftBank's Vision Fund. But the billionaire, long reluctant to cash out of investments like Alibaba Group Holding Ltd., embarked on an uncharacteristic sales blitz, raising more than $50 billion by shedding stakes in Alibaba, T-Mobile U.S. Inc. and its domestic wireless affiliate, SoftBank Corp.
SoftBank Group Corp. forecast a record ¥1.35 trillion operating loss for the fiscal year ended in March, a sign of how badly Masayoshi Son's bets on technology startups have been battered in recent months. The company expects to record a ¥1.8 trillion ($16.7 billion) loss from its Vision Fund and another ¥800 billion in losses from SoftBank's own investments. It has written down the value of investments in companies, including office rental startup WeWork and satellite operator OneWeb, which filed for bankruptcy last month. Son's conglomerate has taken one blow after another since the implosion of WeWork's initial public offering last year and SoftBank's subsequent bailout. It bet heavily on sharing-economy startups, which allow people to split the use of offices or cars, but those investments have been particularly hard hit as the coronavirus pandemic curbs unnecessary human interaction.
Masayoshi Son has been among the most fervent believers in the sharing economy, investing billions in startups that help people split the use of cars, rooms and offices. In New York City, the co-working space of SoftBank-backed WeWork stands practically empty as tenants stay home over fears of infection. In Shanghai, drivers for the ride-hailing service Didi Chuxing have seen their pay plummet as customers avoid shared automobiles. In San Francisco, Dara Khosrowshahi, chief executive officer of Uber Technologies Inc., another SoftBank investment, said "I wouldn't put my kids in an Uber." Investors are increasingly spooked about the stability of Son's empire and its $100 billion Vision Fund amid the pandemic.
Masayoshi Son, long known as a free-spending benefactor who encouraged startup founders to pursue their dreams even if it meant losing billions of dollars, had a different message for entrepreneurs last week: Your dreams had better be profitable. The chief executive officer of SoftBank Group Corp. told company leaders gathered at the five-star Langham resort in Pasadena, California, that they need to become profitable soon and stressed the importance of good governance, according to a person who attended the event. Public investors aren't going to tolerate gimmicks, like super-voting rights or complicated share structures, that privilege founders over other stakeholders, he said, adding they should get in shape years before they consider going public. The "or else" part of the message became clear just days later when SoftBank led the ouster of WeWork's controversial co-founder, Adam Neumann. The co-working giant's plans to go public this month imploded, with investors balking at paying a premium for a money-losing real estate venture controlled by an eccentric founder.