[Asia Economy Reporter Yujin Cho] Japan's SoftBank Group recorded massive losses again in the fourth quarter of last year due to losses reflected in its Vision Fund, which mainly invests in technology stocks.
SoftBank reported a net loss of $5.9 billion (approximately 7.4 trillion KRW) in the fourth quarter of last year, Bloomberg reported on the 7th (local time). The decisive cause was a $5.8 billion loss incurred by the Vision Fund held by SoftBank.
Amid a global economic downturn this year causing a general decline in the stock prices of invested companies, the bankruptcy filing of FTX, one of the world's top three cryptocurrency exchanges, continues to weigh on SoftBank's performance. SoftBank wrote off its entire $97 million investment in FTX as a loss in the fourth quarter.
From 2017 through last year, SoftBank invested over $140 billion in technology startups such as Uber, DoorDash, and WeWork through the Vision Fund. When the valuations of these companies soared to all-time highs, SoftBank recorded an unrealized gain of $66.4 billion, but the situation reversed due to worsening management and the tech stock crash.
The cumulative loss from the decline in these companies' stock prices amounts to $6.7 billion. Previously, SoftBank invested over $10 billion in WeWork and additionally invested tens of billions of dollars in loans and other forms during the 2019 restructuring that led to the ousting of WeWork founder Adam Neumann, who was embroiled in controversies including marijuana use.
Yoshimitsu Goto, Chief Financial Officer (CFO), who presented the earnings report on behalf of Chairman Masayoshi Son, said, "Now is not the right time to invest in startups." He added, "We can become aggressive at any time," but "when market conditions are poor like now, investments should be reduced."
The Wall Street Journal (WSJ) analyzed that SoftBank's reduction in investments reflects the severe funding difficulties faced by the global IT industry.
Meanwhile, the Vision Fund's new investments in the fourth quarter amounted to only $300 million. This is less than one-fiftieth of the $15.6 billion invested in a single quarter in 2021.
Navneet Govil, Chief Investment Officer (CIO) of the Vision Fund, stated that about 30 companies in which they have invested are preparing for IPOs in anticipation of improved market conditions. However, regarding market outlook, he said, "There is still uncertainty regarding the labor market, future financial policies, and corporate earnings."
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