Two of SoftBank's biggest investments are struggling to find favor with public investors. But its next big fund is likely still on track.
since its initial public offering in May. Uber's stock closed at $32.24 on Monday, down 28% from its $45 IPO price.
But that second quarter gain included a $1.8 billion investment loss that was due in part to the decline of its stake in Uber. The conglomerate could show a much worse return on its investments in its third quarter report, given that Uber's stock plunged last month after it reported its earnings and WeWork's re-evaluation has only happened in recent days. The combination of those two drops could wipe out a significant portion of SoftBank's total gains.
With WeWork and Uber, the"chickens are starting to come home to roost" for SoftBank's investment strategy, Bohlen said. When public investors see the disconnect between the financial results and valuation, he continued,"the needle comes off the record."Uber's poor showing as a public company to date and WeWork's struggles to even go public are a black eye for SoftBank, venture experts said. And they come at a not particularly ideal time for the company.
For one thing, it's hard to know right now just how much of a hit it may have taken on WeWork, if any at all. Venture investors, particularly late-stage ones, tend to put all kinds of conditions on their investments that limit their downside if the company's valuation falls. They tend to get paid out first in a sale or can get handed out additional shares in a public offering when they convert their pre-IPO stock to common shares.
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