SoftBank
Group CEO Masayoshi Son has ruined his name in the investment
community. His botched investments in WeWork, Uber, and Slack, just to
name a few, could result in billions of dollars in losses for SoftBank
Group Corp., according to Bloomberg, who compiled several notes from
Wall Street analysts detailing the turmoil.
Profit estimates for SoftBank's Vision Fund were slashed by $5.4
billion to an operating loss of $3.5 billion for 3Q19, wrote Mitsubishi
UFJ Morgan Stanley Securities Co, in a recent note. Most of the losses
were due to drastic valuation declines of Uber and Slack, and a massive
writedown of WeWork after the shelved IPO collapsed valuations last
month.
Sanford C. Bernstein & Co. believes SoftBank's Vision Fund could
write down as much as $5.93 billion of WeWork, and SoftBank Group could
writedown another $1.24 billion.
Tanaka said Uber's 35% drop in 15 weeks was a massive reason for
Vision Fund's awful 2Q19 performance. He also reduced SoftBank Group's
fiscal year operating profit to $9.446 billion, from $14.861 billion.
Chris Lane, an analyst at Sanford C. Bernstein, said SoftBank might
record a $3.54 billion drop in the value of its Uber stake and $350 loss
in Slack. Lane believes the combined writedown for WeWork could be
$2.82 billion, but that is based on WeWork's valuation sliding to $15
billion from $24 billion. And as we've reported, WeWork could be worth
$10 billion to $12 billion, a dramatic discount from the $47 billion
valuation seen earlier this year.
It was only yesterday when Son spoke with Nikkei Business magazine, and said he is "embarrassed and flustered" by his recent track record.
孫正義が日経ビジネスに昨日語ったところでは、「当惑、失望している」ということだ。
"The results still have a long way to go and that makes me
embarrassed and impatient," said Son. "I used to envy the scale of the
markets in the U.S. and China, but now you see red-hot growth companies
coming out of small markets like in Southeast Asia. There is just no
excuse for entrepreneurs in Japan, myself included."
If macroeconomic headwinds continue to mount in the global economy,
technology unicorn valuations will reset further, meaning that
SoftBank's Vision Fund will continue to incur steep losses and massive
writedowns through 2020.
As we've highlighted in the last several weeks, the global IPO and M&A markets are starting to falter -- this will further stress Vision Fund as their ability to cash out of technology unicorns are coming to an end for the year.
We even reported last week that veteran venture capitalists called an emergency meeting of the technology unicorns in Silicon Valley to advise them on the turbulent times ahead.
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