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SoftBank has lost more than $14 billion by betting on WeWork

Hasan Chowdhury   

SoftBank has lost more than $14 billion by betting on WeWork
  • Tech conglomerate and investor SoftBank has lost $14.4 billion so far on WeWork.
  • The office-sharing firm filed for bankruptcy earlier this week.

SoftBank has lost a cumulative $14.4 billion through its disastrous bet on the now-bankrupt WeWork, per the group's July-September earnings.

The technology group posted a loss of $1.5 billion (¥234.4 billion) in the first half of 2023 relating to its stake in the office-sharing company, which filed for Chapter 11 bankruptcy earlier this week. Its total loss could go higher.

SoftBank overall posted a loss of $6.2 billion (¥931.1 billion) for July to September, compared a profit of $20 billion the same period last year.

It's a stark turnaround.

Fuelled with conviction from SoftBank founder Masayoshi Son and billions in investment, WeWork sailed to a colossal $47 billion valuation at its peak in 2019. Another SoftBank executive predicted the firm would reach $100 billion.

This bullishness and the relationship between Son and WeWork's founder and then-CEO Adam Neumann raised eyebrows.

Neumann once said Son "appreciated how he was crazy" but thought that he "needed to be crazier."

Neumann also claimed that Son likened him to Jack Ma, the Chinese billionaire founder of Alibaba. Son himself became a billionaire thanks to betting on Ma and Alibaba.

But Neumann failed to reach the equivalent heights. WeWork struggled towards an IPO, hampered by doubts over Neumann's direction and the core business model. Neumann stepped down and the firm did eventually go public via a SPAC merger. But pandemic lockdowns and a reversion to working from home weakened the business further.

After filing for Chapter 11 bankruptcy on Monday, WeWork has entered a restructuring process with lenders.

For Son, the WeWork saga has been a deeply embarrassing one. Even after WeWork's original botched IPO, the CEO was insistent that WeWork could be profitable during a presentation. At one point, he showed a chart depicting never-ending growth in gross profit over an undefined period of time.

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