In a recent turn of events, SoftBank Group Corp SFTBY declared its entire investment in WeWork as a loss. This announcement comes despite SoftBank’s first profitable quarter in five.
What Happened: SoftBank decided to write off the entire investment in WeWork to zero in the fourth quarter of 2023, as mentioned by Reuters.
SoftBank’s most high-profile investment, WeWork, filed for bankruptcy in November 2023 after years of burning through SoftBank’s cash at inflated valuations. This led to a $6.2 billion loss in SoftBank’s venture arm, the Vision Fund, in the second quarter of 2023, reported CNBC.
On Thursday, SoftBank reported a net profit of 985.5 billion yen ($6.6 billion) for the quarter ending in December 2023. This marks a significant turnaround from the 744.7 billion yen ($5 billion approx.) loss in the same period a year earlier.
SoftBank had previously informed investors that its cumulative loss on WeWork exceeded $14 billion. Following a $32 billion loss in the Vision Fund in 2022, SoftBank’s CEO, Masayoshi Son, indicated a shift away from aggressive investments. However, in late 2023, SoftBank announced a return to “offense” mode, focusing on AI investments.
Vision Fund also made $4.35 billion in gains in the same quarter, a visible upturn after sustaining four consecutive quarterly losses. The bounce-back has been attributed to the rebounding prices of tech stocks.
Moreover, 2023 ended on a sweet note for SoftBank as it received $7.6 billion worth of T-Mobile US Inc. at no extra cost, leading to an increase in shareholding.
Why It Matters: The complete write-off of the WeWork investment is a significant development. Once valued at nearly $50 billion, the company had been struggling for years. In November, WeWork filed for bankruptcy after failing to pay interest payments to its bondholders.
Despite this, WeWork’s co-founder Adam Neumann has been fighting to buy the company back. Neumann, who had stepped down as the CEO in 2019, has been trying to acquire crucial information from WeWork since December to create a buying bid.
This content was partially produced with the help of Benzinga Neuro and was reviewed and published by Benzinga editors.
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