Japanese investment giant SoftBank has warned of its biggest annual operating loss ever after its tech-focused Vision Fund bled almost $17 billion last fiscal year.
SoftBank blamed its poor performance on the “deteriorating market environment” in a shareholder letter published on Monday, albeit without explicitly naming the coronavirus pandemic.
As a whole, SoftBank expects to report losses of more than $12.5 billion for the fiscal year ending March 31. Last year, SoftBank reported $21.4 billion in profits, as noted by the Financial Times.
This would reportedly be the first time SoftBank has posted an operating loss in 15 years.
SoftBank’s Vision Fund is the world’s biggest tech venture fund
SoftBank attributed a major chunk of the losses to its venture fund for tech startups, Vision Fund, which is the largest of its kind in the world with more than $100 billion in capital under management.
Vision Fund, for want of a better word, is a flop. Despite its presence in tech, Barron’s found 40% of Vision Fund’s assets are tied up in transportation and logistics firms like Uber, DoorDash, Grab, and Didi — all loss-making ventures that’ve been hit hard by the coronavirus pandemic.
In fact, just 4% of Vision Fund’s cash is reportedly invested in cloud and enterprise computing.
There’s also the $14-odd billion Vision Fund pumped into the comically disastrous co-working space company WeWork; a toxic saga that’s led ousted WeWork chief exec Adam Neumann to sue SoftBank over a $3 billion rescue deal gone wrong.
Outside of Vision Fund, SoftBank expects to be down more than $7.4 billion, thanks in part to the collapse of satellite startup OneWeb, in which it invested $1.9 billion and owned 40% of its shares.
Traders have so far responded positively to SoftBank‘s loss projections. Its share price was actually up more than 5% shortly after Tuesday’s open, as the wider market looks to recover from coronavirus-fueled turmoil.
Published April 14, 2020 — 15:09 UTC