SoftBank Group sank Wednesday to a quarterly loss that was far larger than analysts’ estimates, hit by the falling valuations of a few of its most significant tech ventures such as WeWork and Uber Technologies.
The Japanese investment titan recorded an operating loss of 704 billion yen ($6.46 billion) during the July to September quarter. SoftBank marked an operating profit of 706 billion yen in the identical period a year earlier.
The loss compared with an operating loss of 48 billion yen estimate on average by four analysts, according to Refinitiv.
The group’s first quarterly loss in 14 years casts doubt on founder Masayoshi Son’s high-risk technique of investing in cash-burning startups, as he is attempting to raise second giant investment capital.
The funding conglomerate stated its $100 billion Vision Fund recorded an unrealized loss of 537.9 billion yen for the six months as the value of its tech ventures, including WeWork and Uber, fell.
The Saudi Arabia-supported Vision Fund, which is run by ex-Deutsche Bank banker Rajeev Misra, has funded $70.7 billion to 88 companies at the finish of September. These investments are now worth $77.6 billion excluding exits, it said.
Last month SoftBank was forced to spend over $10 billion to bail out office-sharing startup WeWork after its IPO attempt failed.
With increased market investigation over the route to profitability for many of its bets on unproven startups, SoftBank is struggling to take them to market – an essential step to unlock capital to maintain its investment giant progressing.
The value of most of the fund’s listed investments, along with Uber, Slack Technologies, and Guardant Health, tanked during the quarter.