It’s not often that a CEO publicly admits they made a blunder, but that’s just what SoftBank Founder and CEO Masayoshi Son did Monday (May 18) regarding the firm’s WeWork investment, which went south, Business Insider reported.
“It was foolish of me to invest in WeWork,” he said during an earnings presentation as the Tokyo-based holding company valued WeWork at $2.9 billion at the end of March, down from $7.3 billion at year’s end, following its failed initial public offering (IPO). “I was wrong.”
WeWork is the New York-based commercial real estate company that provides shared workspaces for technology startups. Last year, it was valued as high as $47 billion, CNBC reported.
Vox reported last fall that SoftBank had invested $18.5 billion in the company, according to a comment leaked in October from WeWork Chairman Marcelo Claure.
Claure took to Twitter and said he and Son remain huge believers in what he called the new WeWork and its management team.
″[W]e will continue to support the company,” tweeted Claure, who is also CEO of SoftBank Group International. “We have no doubt that @WeWork will emerge from #COVID19 stronger than ever and are committed to profitability by 2021.”
Advertisement: Scroll to Continue
SoftBank is known for its savvy and high-profile investments, CNBC reported. It earned its reputation on a successful bet on Chinese tech giant Alibaba. But SoftBank took several hits last year when two of its investments, Uber and WeWork, revealed massive losses in their filings to go public.
WeWork’s IPO bid failed amid criticism about its financial losses and unusual corporate governance structure, CNBC reported.
It’s not the only embarrassment SoftBank is facing. The COVID-19 pandemic could continue to devastate SoftBank’s biggest investments. Oyo, Uber, Zume and WeWork have laid off more than 8,000 people since January, Business Insider reported.
Also on Monday, PYMNTS reported SoftBank Group posted a record-breaking $18 billion operating loss right after Jack Ma, Alibaba co-founder, said he was stepping down from the board, according to the company. His departure followed first-quarter earnings results of an annual operating loss of $12.7 billion, its first annual loss in 15 years.
