Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. lowered its forecast for the third quarter of the Softbank Vision Fund on Tuesday.
Editor’s note: This article is from Tencent Technology.
According to foreign media reports, from the initial public offering of shared office space WeWork deducted to Uber’s listing, the stock price fell sharply, and the startup of Softbank CEO Sun Zhengying experienced a difficult few months. Now market analysts are beginning to calculate that Sun Zheng’s Softbank Group may lose more than $5 billion.
Mitsubishi UFJ Morgan Stanley Securities Co. Ltd. on Tuesday lowered its forecast for the third quarter of the Softbank Vision Fund. The broker cut the operating profit of the Softbank Vision Fund in the third quarter by 580 billion yen (about 5.4 billion US dollars), arguing that due to the fall in Uber and Slack’s share price, and WeWork’s postponement of the initial public offering, the Softbank Vision Fund in the third quarter Operating losses will reach 367.6 billion yen. Mitsubishi UFJ Morgan Stanley Securities Co., Ltd. also reduced its operating profit for Softbank this fiscal year to 580 billion yen to 1.01 trillion yen.
After relocating Softbank, which owns dozens of global initial company shares, from a telecom operator to an investment group, Sun Zhengyi is experiencing a particularly difficult period. By betting on companies such as the Chinese e-commerce giant Alibaba Group, Sun Justice has gained more than $14 billion in personal wealth. But recent troubles have put pressure on Softbank’s stock, and as investors are increasingly worried about the valuation of start-ups, Softbank’s stock has fallen about 30% from its peak earlier this year. Hideaki Tanaka, an analyst at Mitsubishi-Japan Morgan Stanley Securities Co., Ltd., said in the research report: “The profit of the Softbank Vision Funds division may still fluctuate greatly in the future.”
Sun Zhengyi said in an interview with Nikkei Business Weekly that he is dissatisfied with his achievements so far. “The result is that there is still a long way to go, which makes me feel embarrassed and impatient,” Sun Zheng said. “I have envied the size of the US and Chinese markets, but now you can see that there are booming growth companies in small markets like Southeast Asia. There are no excuses for Japanese entrepreneurs, including myself.”
“This is just the beginning, I think there is huge potential there,” Sun Zheng said. He said his strategy is to invest in companies like him who share a vision of artificial intelligence to reshape the world. Sun Zhengyi also said that although the investment in WeWork and Uber is nowThere may be a loss, but it will yield a substantial profit after 10 years. At the retreat of the portfolio company held at the end of last month, Sun Zhengyi conveyed a different message: profit as soon as possible. In this meeting, Sun Zhengyi also emphasized the importance of good governance. Just a few days later, the controversial WeWork co-founder Adam Neumann announced his resignation as CEO.
The source said that WeWork is negotiating a new round of $1 billion in financing with Softbank to help the office space company successfully pass the restructuring stage. It is reported that if the financing is successful, WeWork will be expected to further discuss the $3 billion loan transaction with JP Morgan Chase. According to sources, Softbank hopes to renegotiate a $1.5 billion warrant transaction and then provide another $1 billion in investment. The warrant transaction was signed in January, when WeWork’s valuation was approximately $47 billion. According to foreign media reports last month, WeWork’s valuation has dropped to between $10 billion and $12 billion when the company decided to abandon its initial public offering.
Market analysts believe that if Softbank invests in WeWork for a valuation of $24 billion to $26 billion, Softbank and its vision fund may face book losses. Another source said that Softbank would not be willing to invest more in WeWork, but the current form has forced Softbank to consider remediating its previous investments with new investments.
It is reported that WeWork hopes to complete the transaction negotiation with Softbank and JP Morgan Chase as early as next week. At the same time, the company also expects to announce layoffs and business adjustment plans as early as next week. Last week, it was reported that WeWork’s new co-CEO Artie Minson and Sebastian Gunningham, company co-founder Miguel McGhee (Miguel) McKelvey said at a staff meeting last Thursday that spending cuts will include layoffs.
A WeWork executive said that layoffs will be handled as “humanely” as possible. It is reported that WeWork may lay off 2,000 people worldwide, accounting for about 16% of the total number of 12,500 employees. (Tencent Technology Compilation/沧粟)