• 8 hours How To Spy On Yourself: The Doorbell To End Civil Liberties
  • 2 days Analyst Predicts Tesla Stock Will Soar To $500
  • 3 days Australian Billionaire To Invest In $88 Million Struggling Solar Project
  • 3 days Twitter-Shaming: The Biggest Threat To Any Business
  • 3 days Canada Looks To Become A Major Source For Critical Minerals
  • 4 days Hedge Funds Are Piling Into This Key Commodity
  • 6 days Trade Deal Not Likely Before Christmas 2020
  • 6 days America's $16 Trillion Debt Bubble Is About To Burst
  • 6 days Black Friday Breaks Online Shopping Records
  • 7 days Tesla's Biggest Competitor Is Hiding In Plain Sight
  • 7 days Are Celebrities Good Or Bad For Cannabis Stocks?
  • 9 days Venezuela’s Crisis Continues As Maduro Spends $5 Billion On Oil Deals
  • 10 days Elon Musk Claims 250,000 Orders For Cybertruck
  • 10 days How To Survive Thanksgiving Politics With Cannabis Gravy
  • 12 days The Fragility Of Monetary Policy
  • 12 days 5 Oligopoly Stock Picks For Your 2020 Portfolio
  • 13 days $7 Trillion In Unfunded U.S. Pensions As Domestic Debt Hits A Record High
  • 13 days Retail Is Alive And Well, But Only For The Rich
  • 13 days New Tech Could Unchain The Solar Revolution
  • 14 days China's Boldest Move Yet To Ditch The U.S. Dollar
The Dairy Industry Is Dying

The Dairy Industry Is Dying

In 2018 alone, the U.S.…

Will Japan Turn Its Back On The Aramco IPO?

Will Japan Turn Its Back On The Aramco IPO?

Japanese firms will probably stay…

  1. Home
  2. Investing
  3. Other

SoftBank Reeling After Questionable WeWork Investment

SoftBank

SoftBank Group CEO Masayoshi Son says he is "embarrassed and flustered" by his track record after the valuations of WeWork and Uber plunge, in an interview with Nikkei Business magazine on Monday morning. 

"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." A lot of Son's embarrassment is centered around his $100 billion Vision Fund where he ignored valuation metrics of WeWork and Uber, and invested into these technology unicorns at ultra-high valuations, only to find out, that in 2019, he overpaid for those investments. 

We recently said, as the proverbial tide goes out, Son has been caught swimming naked. 

SoftBank/Vision Fund plowed nearly $10 billion into WeWork, investing some of that capital at a $47 billion valuation in 1Q19.

But since WeWork's IPO was shelved, the startup is now only worth $10-12 billion.

Uber is another failure for Son's Vision Fund, since the initial listing, the company has lost almost 37% of market capitalization. 

It's apparent that Son's aggressive risk-taking in technology companies left him overlooking valuation metrics in the last several years. 

Related: Is China's Mining Dominance Coming To An End?

Another terrible judgment call on Son's part was the announcement of a $5.5 billion share buyback program of SoftBank Group's shares, earlier this year. The billionaire investor decided to buyback company stock because valuations of WeWork and other investments saw significant valuation increases. 

And last Friday, we said Son is having tremendous difficulty attracting investors to Vision Fund 2 amid new developments that Vision Fund could see significant writedowns in the quarters ahead after WeWork and Uber valuation implosions.

If macroeconomic headwinds continue to mount in the global economy, technology unicorn valuations will reset further. 

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.  

And of course, Son is "embarrassed," who wouldn't be, when you're caught swimming naked as the tide goes out. 

By Zerohedge.com

More Top Reads From Safehaven.com:

Back to homepage

Leave a comment

Leave a comment