SoftBank Reports Resilience with $6.6 Billion Profit Amidst WeWork Investment Loss

In a striking development, SoftBank Group Corp has announced a complete write-down of its investment in the coworking space provider WeWork, acknowledging the entire venture as a loss. This comes at a time when SoftBank has experienced a return to profitability for the first time in five quarters, showcasing the company's financial resilience.

Declaring WeWork a Complete Loss

According to a Reuters report, SoftBank made the decision to write down its WeWork investment to zero during the fourth quarter of 2023. Despite the monumental setback, SoftBank has managed to report a significant profit in the following quarter.

SoftBank's Quarter in Numbers

A notable recovery is evident as SoftBank recorded a net profit of 985.5 billion yen (equivalent to $6.6 billion), for the final quarter of 2023. This profit marks a substantial improvement from the loss of approximately 744.7 billion yen ($5 billion) reported in the same timeframe the previous year.

The Fall and Fallout of WeWork

WeWork's insolvency in November 2023 came after a period where it steadily drained SoftBank's funds at overvalued prices, contributing to a loss of $6.2 billion in the second quarter of 2023 within SoftBank’s venture unit, the Vision Fund, as CNBC detailed. Altogether, SoftBank had informed stakeholders that its WeWork-related losses surpassed $14 billion.

Strategy Shift and Vision Fund's Recovery

SoftBank's CEO, Masayoshi Son, signalled a move away from high-risk investments after significant losses were incurred by the Vision Fund in 2022. Nonetheless, later in the year, SoftBank switched gears back to an aggressive stance with a focus on AI investments. Notably, the Vision Fund rebounded with $4.35 billion in gains during the same profitable quarter, following a year of persistent losses.

Surge from Tech Stocks and T-Mobile Shares

The recent uptick in profits can be partly attributed to the revival in the tech market. Additionally, SoftBank's year ended on a high note as it received T-Mobile US Inc. stocks valued at $7.6 billion without additional cost, thereby increasing its shareholding in the telecom giant.

A Diminished Giant: WeWork's trouble

Despite the impressive recovery of SoftBank, the story of WeWork casts a long shadow. Once estimated at nearly $50 billion, WeWork struggled significantly leading up to its bankruptcy filing after defaulting on bond interest payments. WeWork’s saga continues as co-founder Adam Neumann seeks to reacquire the company, despite his departure from the CEO post in 2019.

SoftBank, WeWork, Profit