SoftBank Loses $5.9 Billion in Quarter as Investments Suffer

TOKYO—SoftBank Group Corp. 9984 0.02%increase; green up pointing triangle was the world’s biggest investor in startups in 2021. Now it is barely investing at all. 

A year into the tech rout, Tokyo-based SoftBank is still taking hits from a peak-of-the-market spending spree, as the company on Tuesday posted a $5.8 billion quarterly loss on its startup investment fund division, known as the Vision Fund, the bulk of the company’s overall $5.9 billion quarterly loss.  

The Vision Fund unit reported roughly $300 million in new investments, down 98% from the $15.6 billion spent in three months in mid-2021, when SoftBank and its chief executive Masayoshi Son were known for showering cash on a frothy startup market. 

The near-complete retreat is part of what Mr. Son has termed a strategy of “defense” in which SoftBank is holding on to cash from better-performing parts of the company—such as the Japan telecom business it partially owns—rather than putting it into startups.  SoftBank Group Stock PriceSource: FactSetMarch 2021’22’234,0005,0006,0007,0008,0009,00010,000¥11,000

SoftBank Group’s chief financial officer, Yoshimitsu Goto, told reporters Tuesday it simply wasn’t a good time to invest in startups. 

“We can become aggressive any time,” he said, cautioning against “wasteful spending” at a bad moment in the market.

The results emphasize the depth of the comedown for SoftBank, which spent more than $140 billion out of its Vision Fund segment between 2017 and last year, an amount that dwarfed the largest venture-capital firms in Silicon Valley and went into companies like Uber TechnologiesDoorDash and WeWork. At its peak, it turned that money into a $66.4 billion profit—on paper. On Tuesday, it said the figure had slipped to a $6.7 billion cumulative loss.

The latest losses come largely from a quirk of reporting in the private investment market that has led investment managers to take losses on privately held startups over a longer period than publicly traded shares. While SoftBank takes losses on the public stocks it owns when the share price goes down—like WeWork or real-estate brokerage Compass—private investments are harder to value on a daily or monthly basis, and often rely heavily on a company raising new money, or missing internal targets. 

SoftBank marked its privately held startups from its two Vision Funds down by more than $5 billion in the quarter, even as publicly held shares rebounded.


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Analysts and some short sellers have said the valuations placed on private companies could fall more, given the disconnect between losses on companies now publicly traded, and those that are still private.

For instance, the publicly traded shares held by SoftBank’s flagship Vision Fund are down 37% from SoftBank’s initial investment—a loss of $11.5 billion. Meanwhile, SoftBank said its stakes in privately held companies have a modest profit of 4.6%, or $1.6 billion above its cost. Those private investments include companies like India-based hotel company Oyo, TikTok owner Bytedance and instant delivery company GoPuff. 

The company also disclosed another loss on its investment in WeWork: SoftBank wrote down the value of loans it made to the company by $1.8 billion.

SoftBank had alreadpumped more than $10 billion into the company when it viewed it as a promising startup valued like a tech company. Then it added billions of dollars more in debt and equity as part of a 2019 rescue and restructuring following the ouster of co-founder Adam Neumann. After listing publicly in 2021, WeWork’s share price has plunged over concerns about the health of the office market and its continued losses. WeWork’s market capitalization is roughly $1.5 billion.

One troubled area SoftBank largely avoided was cryptocurrency. SoftBank said it made 26 crypto investments it values today at $1 billion, a relatively small chunk of its funds. SoftBank disclosed a full write-off of $97 million on its investment in FTX, Sam Bankman-Fried‘s now-bankrupt cryptocurrency exchange

A rebound in tech shares so far this year has brightened the picture somewhat for SoftBank. Navneet Govil, chief financial officer of the Vision Fund unit, said Tuesday about 30 companies in the portfolio of the Vision Funds were ready to go public when market conditions improved, which could allow SoftBank to cash in on gains. Still, the company was cautious in its outlook.

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