SFTBY - SoftBank Group Corp.

Other OTC - Other OTC Delayed Price. Currency in USD
+0.16 (+0.82%)
At close: 4:00PM EST
Stock chart is not supported by your current browser
Previous Close19.53
Bid0.00 x 0
Ask0.00 x 0
Day's Range19.58 - 19.75
52 Week Range15.54 - 28.04
Avg. Volume1,066,188
Market Cap81.525B
Beta (3Y Monthly)1.60
PE Ratio (TTM)2.75
EPS (TTM)7.15
Earnings DateN/A
Forward Dividend & Yield0.10 (0.52%)
Ex-Dividend Date2019-03-28
1y Target EstN/A
  • Bloomberg

    SoftBank's New Tech Fund to Fall Short of Target, Telegraph Says

    (Bloomberg) -- SoftBank Group Corp. has scaled back ambitions for its second Vision Fund after the failure of big bets including WeWork by its first fund rattled partners such as Saudi Arabia, according to the Sunday Telegraph.The second Vision Fund is expected to fall significantly short of the $108 billion originally planned, the Sunday Telegraph report said, citing unidentified people with knowledge of the matter.Discussions are continuing with potential partners including Mubadala Investment Co. and the Public Investment Fund, the sovereign wealth funds of Abu Dhabi and Saudi Arabia, but neither has yet committed to the new fund, the report said. A SoftBank Vision Fund spokesman told the newspaper that fundraising was progressing as expected as external investors assess their potential commitments.SoftBank’s massive investment in WeWork triggered a multi-billion dollar writedown and a rare apology from founder Masayoshi Son. The Japanese company was forced to provide a $9.5 billion rescue package to the shared-office-space provider in October after it withdrew an initial public offering.Read more: SoftBank’s Second Vision Fund Starts Life a Lot SmallerTo contact the reporter on this story: Bill Lehane in London at blehane@bloomberg.netTo contact the editors responsible for this story: Alaric Nightingale at anightingal1@bloomberg.net, Patrick Henry, Cecile GutscherFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Uber Stock Suffers Greatly From Company’s Hazy ‘Vision’

    Uber Stock Suffers Greatly From Company’s Hazy ‘Vision’

    Every viable business creates a win-win situation. Employees get a sustainable income. Customers get value. Shareholders get profits. Uber (NYSE:UBER) doesn't do any of that.Source: TY Lim / Shutterstock.com Employees aren't making sustainable income and they're not treated like employees. Shareholders aren't seeing any profits, even at scale. Customers have been seeing value only because their rides are subsidized by shareholders.Uber went public in May 2019 because it had to. Private equity and venture funding had grown tired of the pretense that it would work. They wanted out. Since then, the stock is down almost 33%.InvestorPlace - Stock Market News, Stock Advice & Trading TipsIf you bought UBER stock it's because I couldn't convince you not to. I warned you in May, in August and September. You didn't listen.Can you believe me now? Son's Lack of VisionUber is a product of SoftBank Group (OTCMKTS:SFTBY) CEO Masayoshi Son. The idea behind his Vision Fund was to disrupt huge industries, using software and Saudi money, and to have a dominant position in the resulting companies. * 7 Hot Stocks for 2020's Big Trends The fund has some winners. Paytm, the Indian payments company, looks like a winner. Kabbage, another fintech player, may be a winner. Fanatics may do OK.But most are like Uber. Slack (NYSE:WORK) has been a loser on public markets. WeWork, as I said over the summer, doesn't.Son went too big, too fast on a lot of these deals. He put in more money than many of these companies could use. He convinced founders like WeWork's Adam Neumann (and Uber co-founder Travis Kalanick) they could do no wrong. SoftBank's CEO became like Jeffrey Cordova in The Band Wagon, producing pretentious versions of Faust when he could have been making nice little musicals.Son, in short, let founders run when he should have used a short leash, and a quick hook. What Tech Can't DoTechnology can disintermediate industries. When there's a high cost in making something happen, technology can drop that cost to zero. It's in transaction costs that disruptive technology earns its way.But there isn't enough money in taxis to make that work, even when the business scales. Uber lost $1.2 billion during the most recent quarter, on adjusted revenue of $3.8 billion. That's a 30% gain in revenue, but the losses were 18% higher than the previous year, when they came in at $986 million.In order to achieve those third quarter results CEO Dara Khosrowshahi bypassed normal employment checks to protect passengers, which put them in danger. It also treated the people doing its work like hot garbage. In other words, it squeezed the people on both sides of every transaction, as hard as it could, and still didn't make any money.The promise of Uber was it would eliminate the driver. But that was always a canard. The technology was stolen from Alphabet's (NASDAQ:GOOG, NASDAQ:GOOGL) Waymo, by a man named Anthony Levandowski. And it still doesn't work. The Bottom Line on Uber StockUber is the perfect business analogy for our time.It claimed to be profiting from the benefits of technology, but it was always about disintermediating law, not industry. Drivers were told they were qualified to be taxi drivers, and doubtless many were. Passengers were told technology could give them safe rides at a bargain price, and doubtless many got them. Investors were told that Uber stock could create a dominant position quickly, then squeeze all sides of the business for big profits.Which was the greatest fool? I'd argue it was those who invested in the Vision Fund. Son believed his own rhetoric. The Saudis bought his reality distortion field. Son has a second Vision Fund and insists he has learned his lesson.We shall see.Dana Blankenhorn is a financial and technology journalist. He is the author of the historical mystery romance The Reluctant Detective Travels in Time available now at the Amazon Kindle store. Write him at danablankenhorn@gmail.com or follow him on Twitter at @danablankenhorn. As of this writing he owned no shares in companies mentioned in this story. More From InvestorPlace * 2 Toxic Pot Stocks You Should Avoid * 7 Hot Stocks for 2020's Big Trends * 7 Lumbering Large-Cap Stocks to Avoid * 5 ETFs for Oodles of Monthly Dividends The post Uber Stock Suffers Greatly From Company's Hazy 'Vision' appeared first on InvestorPlace.

  • Style Theory, a fashion rental startup in Southeast Asia, raises $15 million led by SoftBank Ventures Asia

    Style Theory, a fashion rental startup in Southeast Asia, raises $15 million led by SoftBank Ventures Asia

    Style Theory, a platform for renting designer apparel in Indonesia and Singapore, announced today it has raised $15 million in Series B funding. It was led by SoftBank Ventures Asia, the early-stage venture arm of SoftBank Group, with participation from other investors, including Alpha JWC Ventures and the Paradise Group. Both SoftBank Ventures Asia and Alpha JWC Ventures are returning investors, having previously participated in Style Theory’s Series A.

  • Financial Times

    Too much money leads to ‘a lot of mistakes’, says Jack Ma

    Jack Ma, the founder of Alibaba, has warned that “too much money” inevitably leads to a “lot of mistakes” in a panel discussion with Masayoshi Son, the free-spending chief of SoftBank. “You don’t make mistakes when you don’t have money,” Mr Ma told an audience of students at the University of Tokyo. “My passion and dream is more than 100 times bigger than what I have achieved so far,” Mr Son said.

  • SoftBank's Son sticks with gut-led investing in chat with Alibaba's Ma

    SoftBank's Son sticks with gut-led investing in chat with Alibaba's Ma

    Weeks after his billion-dollar bailout of WeWork, SoftBank Group Corp's founder and CEO Masayoshi Son reiterated his belief in an instinct-led investing style, in a discussion with Alibaba Group Holding Inc's co-founder Jack Ma. SoftBank owns 26% of China's Alibaba, with its origin in a $20 million investment in 2000, and the stake is now worth more than the Japanese firm's market capitalization. Son on Friday said the decision to invest in Alibaba was driven by a gut feeling.

  • Reuters

    UPDATE 1-SoftBank's Son sticks with gut-led investing in chat with Alibaba's Ma

    Weeks after his billion-dollar bailout of WeWork, SoftBank Group Corp's founder and CEO Masayoshi Son reiterated his belief in an instinct-led investing style, in a discussion with Alibaba Group Holding Inc's co-founder Jack Ma. SoftBank owns 26% of China's Alibaba, with its origin in a $20 million investment in 2000, and the stake is now worth more than the Japanese firm's market capitalization. Son on Friday said the decision to invest in Alibaba was driven by a gut feeling.

  • Financial Times

    WeWork debacle has a silver lining

    The soufflé-collapse of his biggest bet, WeWork, an office-leasing company with a mission to “elevate the world’s consciousness” but no obvious ambition to make a profit, means a humbled SoftBank will inevitably be making smaller bets for the time being. Venture capital has provided portfolios with some of their biggest investment gains in recent years, but it is becoming clear that private market valuations have been illusory in many cases.

  • Moody's

    SB Handset Installment Sales Receivables Securitization 2019-12 -- Moody's assigns provisional ratings to SB handset ABS transaction

    Moody's SF Japan K.K. has assigned provisional ratings to SB Handset Installment Sales Receivables Securitization 2019-12 backed by handset installment sales receivables, originated by SoftBank Corp.

  • Barrons.com

    After WeWork Debacle, SoftBank Stock Is Now Too Cheap, Analyst Says

    HSBC’s Neale Anderson lifted his rating on SoftBank Group to Buy from Hold, setting a target price of 6,150 for its Tokyo-listed shares, well above their current price of 4,200.

  • Governance Expert Cendrowski: WeWork Investors Gave Real Estate a Software Valuation

    Governance Expert Cendrowski: WeWork Investors Gave Real Estate a Software Valuation

    Harry Cendrowski, Founding Member and Managing Director of Cendrowski Corporate Advisors By John Jannarone WeWork’s private investors including Masayoshi Son’s Softbank Group Corp apparently gave the shared office space company a software valuation, a consequence of a frenzied investment environment that paid little regard to fundamental analysis or corporate governance. That’s according to governance expert […]

  • SoftBank pours $100M into Mexico’s Konfio

    SoftBank pours $100M into Mexico’s Konfio

    Three months after Goldman Sachs lent $100 million to Mexican fintech Konfio, SoftBank has invested another $100 million into the financial services company. The investment confirms Reuters' August report that SoftBank was in advanced talks with the startup -- now one of the most heavily funded fintechs in Mexico. SoftBank is continuing to expand its Mexican portfolio, which now includes used car buying platform Kavak and payments startup Clip.

  • Bloomberg

    SoftBank Deepens Mexico Bet With $100 Million for Lender Konfio

    (Bloomberg) -- SoftBank Group Corp. is leading $100 million in funding for a Mexican small-business lender, its third investment in the country since the Japanese technology giant announced a multibillion-dollar foray into Latin America.The Mexican company, called Konfio, will use the funds to expand working-capital loans and introduce new products, said investor-relations director Gregorio Tomassi. Founded in 2013, Konfio lends money to small and medium-sized companies, which are often underserved by traditional banks.Konfio’s loans average $12,000, significantly below banks’ average business loan of $40,000, Tomassi said. Users can fill out an application in as little as eight minutes and can have the money in their pocket in the following 24 hours without any collateral, he said.“We consider ourselves a tech company that’s focused on resolving one of the biggest problems for small and medium-sized businesses, which is access to credit,” Tomassi said. “We grant quick loans based on technology, alternative data sources, artificial intelligence and data science.”SoftBank launched a $5 billion fund in March aimed at new technology companies in Latin America, and has its sights on roughly 300 targets. SoftBank’s expansion in the region is being overseen by SoftBank Group International’s chief executive officer, Marcelo Claure, who was also recently appointed WeWork’s new executive chairman.The Japanese firm has already doled out more than $1 billion of its fund, with several investments in Brazil, including MadeiraMadeira Comercio Eletronico SA, Loggi Tecnologia Ltd. and Banco Inter SA, and Rappi SAS in Colombia. The fund’s first investments in Mexico were in used-car sales platform Kavak and payments firm Clip.Early InvestorsThe company’s investment in Konfio will be used to expand working capital loans and introduce new products, Tomassi said. Other investors in the fourth-stage funding include QED Investors, Kaszek Ventures and Vostok Emerging Finance Ltd., who were all early backers in the Mexico City-based startup. Konfio previously raised around $300 million in capital and credit lines, counting the World Bank Group’s International Finance Corp. as a backer.New products that Konfio is considering include providing businesses analysis of customers’ credit reports and expanding an online marketplace named Konsiento, where businesses can find legal services, website designers and office supplies at a discount. On average, Konfio’s clients grew sales by 28% in the six months after receiving a loan, compared to the year-earlier period, Tomassi said.Last month SoftBank reported its first operating loss in 14 years of 704.4 billion yen ($6.5 billion) after writing down the value of a string of marquee investments. It reported 537.9 billion yen of unrealized losses in investments including Uber and WeWork. Its signature Vision Fund -- the world’s single largest pool of startup investments -- reported a 970.3 billion yen loss in the quarter.To contact the reporter on this story: Andrea Navarro in Mexico City at anavarro30@bloomberg.netTo contact the editors responsible for this story: Brendan Case at bcase4@bloomberg.net, Susan WarrenFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Bloomberg

    SoftBank-Backed OYO Elevates Key Executive to Board

    (Bloomberg) -- OYO Hotels, the SoftBank Group Corp.-backed startup that’s built up a large chain of branded hotels and vacation homes around the world, has elevated a key executive to the board to help it focus on profitability and quality control.Aditya Ghosh, who had served as OYO’s chief executive officer for India and South Asia, is stepping up to a board position and will be succeeded by Rohit Kapoor, the company’s current new real estate businesses chief. On the board of directors, Ghosh joins founder and group CEO Ritesh Agarwal, SoftBank Vision Fund Managing Partner Munish Varma and recent addition Betsy Atkins, an early investor in Yahoo and EBay Inc, among others.Before joining OYO a year ago, Ghosh headed up India’s leading budget airline Indigo. He is now set to focus on sustainability and the path to profitability, OYO said in a statement on Monday. Ghosh will oversee a wide portfolio of business areas, spanning safety and security, customer experience, corporate governance, revenue management and stakeholder communications. OYO has been growing at a rapid speed, but its reputation has been tarnished along the way by customer complaints about bad experiences and grievances about poor or unfair treatment from several of the over 20,000 hotel owners in its chain.Citing Ghosh’s strong business acumen and track record, OYO group CEO Agarwal said he is “the perfect choice for this larger and more strategic role, at a global level.” Ghosh said he would further build OYO as a global brand “by not just growing fast but growing right.”OYO, based in Gurgaon in the suburbs of India’s capital New Delhi, was founded six years ago by then-teenager Ritesh Agarwal. For India’s budget travelers, OYO’s promise of standardized and predictable quality stays was a breath of fresh air from a hotel-booking market that was rife with misleadingly pretty online photos that bore little resemblance to the decrepit rooms found upon arrival. The company’s staff help hotel owners upgrade everything from linen to bathroom fixtures to toiletries, with a bright red OYO sign acting as a seal of approval, encouraging travelers to book on its website. OYO takes a cut of roughly 20%.SoftBank’s Vision Fund has so far invested approximately $1.5 billion in OYO pushing its valuation to $10 billion. Other investors include Airbnb Inc., Sequoia Capital and Lightspeed Venture Partners. OYO is the first Indian startup to achieve global scale, growing quickly in major markets like China and the U.S.Earlier this year, Agarwal, now 26, announced that he was borrowing about $2 billion to buy back a 20% OYO stake from other investors, with help from financial institutions. SoftBank Group founder Masayoshi Son personally guaranteed the loans to Agarwal, according to one person familiar with the matter, and among the institutions funding the buyback was Japan’s Mizuho Financial Group Inc., other people familiar with the matter have said. Mizuho has declined to comment.To contact the reporter on this story: Saritha Rai in Bangalore at srai33@bloomberg.netTo contact the editors responsible for this story: Edwin Chan at echan273@bloomberg.net, Vlad SavovFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • Japanese fashion tycoon Maezawa shows off $900 million SoftBank payday

    Japanese fashion tycoon Maezawa shows off $900 million SoftBank payday

    Japan's Yusaku Maezawa on Friday posted footage of a $900 million payday for the fashion magnate following his sale of a stake in Zozo Inc, the online fashion retailer he founded, to SoftBank Group Corp. In a video posted to YouTube, Maezawa visited a Tokyo bank to update his bank book, which showed a new balance of around 100 billion yen ($900 million). "It's nerve-wracking!" Maezawa said as he entered the branch.

  • Reuters

    SoftBank-backed Ola targets IPO process by March-end 2021, cut staff by up to 5% -sources

    Indian ride-hailing firm Ola, backed by Japan's SoftBank Group Corp, aims to begin the IPO process by the end of March 2021 and plans to cut its workforce by up to 5% as part of preparations, said people with direct knowledge of the matter. The news comes as tech investor SoftBank smarts from the abandoned share sale of major portfolio firm WeWork, as well as its first quarterly loss in 14 years after an $8.9 billion hit to its Vision Fund, through which it is Ola's top stakeholder. Ola, officially ANI Technologies Pvt Ltd, is India's home-grown rival to U.S. peer and fellow SoftBank portfolio firm Uber Technologies Inc. Local media have previously reported Ola was targeting an initial public offering (IPO).

  • Latin America roundup: Neobanks raise $205M+; Softbank backs VTEX

    Latin America roundup: Neobanks raise $205M+; Softbank backs VTEX

    Argentina’s Ualá became the most recent Latin American fintech to receive a growth-stage funding ($150 million) from Asian investors, Tencent and Softbank. Tencent also invested $180M in Brazil’s leading neobank, Nubank in 2018.

  • SoftBank's Appier Raises Fund for AI Marketing Platform

    SoftBank's Appier Raises Fund for AI Marketing Platform

    SoftBank's (SFTBY) Appier aims to revolutionize the way enterprises adopt artificial intelligence to remain competitive and manage business transformation.

  • After WeWork, SoftBank’s Startup Bookkeeping Draws Scrutiny

    After WeWork, SoftBank’s Startup Bookkeeping Draws Scrutiny

    (Bloomberg) -- In early 2018, the founders of Chinese artificial intelligence startup SenseTime Group Ltd. flew to Tokyo to see billionaire investor Masayoshi Son. As they entered the offices, Chief Executive Officer Xu Li was hoping to persuade the head of SoftBank Group to invest $200 million in his three-year-old startup.A third of the way into the presentation, Son interrupted to say he wanted to put in $1 billion. A few minutes later, Son suggested $2 billion. Turning to the roomful of SoftBank managers, Son said this was the kind of AI company he’d been looking for. “Why are you only telling me about them now?” he asked, according to one person in the room.In the end, SoftBank invested $1.2 billion, helping to transform SenseTime into the world’s most valuable AI startup. The young company’s valuation hit $7.5 billion this year.That investment model is now under fire after Son, 62, boosted the equity in office-sharing startup WeWork only to see it plummet as investors balked at enormous losses and troublesome governance. Indeed, SoftBank has participated, along with other investors, in scores of fundraisings that have added a total of more than $150 billion to the value of private companies, according to Bloomberg calculations. Among its deals are the world’s top two startups—ByteDance Inc. valued at $75 billion and Didi Chuxing Inc. at about $56 billion. In some cases, SoftBank’s involvement in multiple funding rounds helped drive up valuations that resulted in paper profits for Son’s company. The WeWork fiasco raises questions about such numbers. The co-working startup’s valuation crested at $47 billion this year with SoftBank’s investment, then plummeted to $7.8 billion in a bailout engineered by Son. WeWork is slashing jobs and scaling back operations.“WeWork is not just a mistake, it is a signal of weakness in the whole model,” said Aswath Damodaran, a professor of finance at New York University’s Stern School of Business, who has written four books on valuing businesses. “If you screwed up that valuation so badly, what about all of the other companies in your portfolio?”SoftBank said WeWork is an exception rather than a symptom of broader problems, and it has learned from the experience.Since unveiling his $100 billion Vision Fund in 2016, Son has become the most active tech investor on the planet, pouring money into more than 80 companies. That helped create a bumper crop of unicorns, more than 300 startups priced at $1 billion or greater, according to the research firm CB Insights.What’s not as well understood is the incentive Son has to keep valuations rising. When SoftBank buys shares in a startup and then invests again at a higher valuation, Son says he has made a profit. That is legal under accounting standards, but SoftBank receives no money. The only change is that SoftBank has boosted the value of its original stake from, say, $1 billion to $2 billion by raising the value of the startup. In SoftBank’s income statements and return calculations, at least some of the additional $1 billion can be counted as profit.“My brain and my heart, almost everything about myself is focusing on Vision Fund”“They pump up valuations to get higher returns to look good to investors,” says Eric Schiffer, chief executive officer of Patriarch Organization, a Los Angeles-based private equity fund. “That kind of fundraising apparatus is essentially unicorn porn.”SoftBank said its accounting complies with all standards and is consistent with widely accepted practices. As for startup valuations, it said it is not determining them on its own and invests with experienced firms such as Sequoia Capital and Temasek Holdings Pte. “Our valuations have been validated by more than 120 sophisticated investors who’ve invested alongside and after us,” Navneet Govil, chief financial officer of SB Investment Advisers, the entity that manages the Vision Fund, said in a statement. SoftBank said it has a rigorous internal process for setting valuations, and it books profit on any increase in valuation only after taking into account future cash flows and public market proxies, as well as private market funding prices. SoftBank’s auditors at Deloitte & Touche check those calculations, and the Vision Fund’s limited partners have their own auditors, including staff from Duff & Phelps and Ernst & Young, who vet the final figures. “Our valuation process is robust and reviewed quarterly by independent auditors,” Govil said. “We believe our performance is strong. In just two and a half years, Vision Fund 1 has already had seven IPOs, $4.7 billion of realized gains, $11.4 billion in cumulative investment gains and returned $9.9 billion to our limited partners.”Today’s accounting rules may be ill-suited to an era of unprecedented speculation on unicorns. Under the International Financial Reporting Standards (IFRS) that SoftBank uses, companies have wide latitude to determine how much they think portfolio companies are worth—and therefore how much profit they report to investors. It’s unclear whether any company has tried to determine paper profits for tech startups on the scale SoftBank is now using. “I don't believe we’ve ever seen an attempt to record this magnitude of income with respect to unquoted equity investments,” said Robert Willens, a tax expert in New York.Son’s bookkeeping has allowed him to claim his average internal rate of return far outpaces those of other investors. This month, as SoftBank took a hit from WeWork, Son defended his investment approach. “There are 5,000 venture capitals globally and average IRR is 13%,” he said. “Our return is about twice as big as this.” Son’s confidence in his own acumen led to the creation of the Vision Fund in 2017, which at the time was more than 10 times the size of any venture capital fund. He was seeking to repeat the success of his most celebrated investment—a $20 million bet on China’s Alibaba Group Holding Ltd. that turned into stock now worth more than $120 billion.With Abu Dhabi’s Mubadala and Saudi Arabia’s Crown Prince Mohammed bin Salman backing the Vision Fund, Son began a blitzkrieg of deals in 2017. He invested more than $35 billion across about 100 companies, according to research firm Preqin. Among the biggest were multi-billion-dollar fundings of WeWork and Didi Chuxing, the Chinese ride-hailing giant modeled after Uber Technologies Inc. In December, a SoftBank-led group invested $9 billion in Uber, including buying stock from existing shareholders.SoftBank began including financial results for the Vision Fund during the fiscal year that ended in March 2018. Total operating profit including a related Delta Fund was 303 billion yen, or less than $3 billion. That surged to 1.26 trillion yen the following year, making it the most profitable unit at Son’s company and accounting for more than half the parent company’s operating income. With Son’s energy directed at startups, SoftBank spun off the domestic telecom business that had made it famous and generated cash for his early investments.“My brain and my heart, almost everything about myself is focusing on Vision Fund,” Son told investors in May.But the profits SoftBank booked were mostly on paper. In the first fiscal year, unrealized gains on investment valuations accounted for essentially all the stated income for the Vision and Delta funds. In the most recent fiscal year, unrealized gains on valuations amounted to 1 trillion yen, while realized gains—like the sale of India e-commerce giant Flipkart to Walmart Inc.—totaled less than 300 billion yen.WeWork underscores the risks of that approach. SoftBank first took a stake in August 2017 at a valuation of $21 billion. It then invested another $3 billion in November 2018 at a $45 billion valuation and later agreed to a $1.5 billion warrant at $47 billion. As Son reported results this May, he highlighted WeWork as an example of portfolio companies heading for IPOs. When the deal fell apart, SoftBank took a 498 billion yen hit.SoftBank Vision Fund said it never took profits from WeWork by marking it all the way up to $47 billion. It kept the shares on its books at about half that price. It still had to take that down by about 75%, which led to the loss.Venture capital and private equity firms are mostly private so they don’t need to report quarterly profits to public shareholders, and their limited partners are typically focused on returns when portfolio companies cash out through IPOs or acquisitions. SoftBank doesn’t reveal specific valuation changes for each of its portfolio companies in a quarter, typically only naming a few winners or losers. Investors putting money in alongside SoftBank are at times affiliates, like Grab, Didi and Alibaba.“If I’m an investor, I want to know how they are coming up with these numbers. Otherwise, you can’t believe any of the valuations,” said NYU’s Damodaran. “The more they talk about accountants the less I would trust the numbers.”SoftBank concluded that under IFRS rules the Vision Fund must count valuation changes as income because its primary business is investing, and SoftBank Group must incorporate that income in its books because the Vision Fund is a consolidated subsidiary. One person close to the company said the resulting profit figures are almost meaningless, but there is no better accounting method given the current rules. “I’m not an accountant or a lawyer, but presenting this as income doesn’t make any sense,” said Ilya Strebulaev, a professor of finance at Stanford University’s Graduate School of Business whose research suggests the latest, post-money valuations typically overvalue startups by about 50%.Adding to the complexity is that startup stakes are sometimes transferred between SoftBank Group and the Vision Fund, which have different shareholders. The price at which those assets are shifted has implications for profits on either side.After WeWork, other deals are coming under scrutiny. SoftBank invested in Didi Chuxing in 2015 with the Chinese company’s valuation at about $6 billion. It then put more money in about once a year as Didi’s valuation climbed to $56 billion.But Didi has run into trouble since the fundraising two years ago. Chinese regulators have cracked down on ride-hailing services for drawing migrant workers into big cities and hurting taxi drivers’ incomes. Two passengers were killed after using its car-pooling service, prompting a government suspension. In addition, investors have grown skeptical about ride-hailing after the roughly 35% slump in Uber’s shares since its May IPO.Uber’s drop means SoftBank should probably mark down Didi by at least the same margin, said one person who has worked on deals with SoftBank. The Japanese company would also have to look at its investments in other ride-sharing companies such as Grab Holdings Inc. in Southeast Asia, the person said. Didi declined to comment. A Grab spokeswoman said there has been no change in its valuation and it has diversified beyond ride-hailing.SoftBank took a loss in its most recent earnings report on its Uber stake, but made no mention of the other ride-hailing firms in its portfolio. It did cut the estimated value of its stakes in Didi and other ride-hailing services in the most recent quarter, according to one person close to the company. SoftBank said it can’t disclose the loss or gain on every portfolio company each quarter.SoftBank said Didi is an example of how it is not responsible for propelling startup valuations because Silicon Valley’s Silver Lake Management invested alongside SoftBank at the same price. Toyota Motor Corp. and Booking Holdings Inc. then bought shares at a higher valuation.In the U.S., food-delivery firm Doordash Inc. struggled to distinguish itself from rivals and hadn’t hit the $1 billion unicorn mark until SoftBank invested in the company last year. Then in just over a year, Doordash’s valuation went from $1.4 billion to $12.6 billion this May. When SoftBank reported earnings the next quarter, it highlighted Doordash as one of the main contributors to its operating income. Perhaps SoftBank’s most controversial deal after WeWork is an Indian startup called Oyo that was founded six years ago by teenager Ritesh Agarwal. It aimed to bring reliable quality to the country’s chaotic lodging industry. Oyo staff help hoteliers upgrade everything from furniture to bedding and toiletries and the hotel or guest house gets a bright red Oyo sign as a seal of approval, encouraging travelers to book. Oyo takes a cut of roughly 25%.While SoftBank backed Oyo from its early days, some people close to the company worry that Son’s relationship with Agarwal is similar to his ties to WeWork co-founder Adam Neumann and that he may be making similar mistakes. The Vision Fund put $250 million into Oyo in 2017 and led a $1 billion funding round last year, which pushed the Indian company’s valuation to $5 billion. Son encouraged Agarwal to expand into markets such as China and the U.S. and to buy properties, including the Hooters Casino in Las Vegas for $135 million.Stephen Givens, an M&A lawyer in Tokyo, argues that Oyo’s business model resembles WeWork’s, a tech-inflected real estate business that has expanded far beyond its initial concept. “Oyo made sense in a place like India,” he said. “But moving into the U.S. and buying real estate is a big risk.”Even as SoftBank ran into trouble with WeWork, it helped push up the valuation of Oyo with an unusual funding round. In October, the Japanese company and Agarwal together chipped in, raising the valuation to $10 billion. SoftBank touted the startup as a bright spot when it took the writedown for WeWork, booking a valuation gain of 590 billion yen on 25 investments, of which Oyo was the only one named.“My brain and my heart, almost everything about myself is focusing on Vision Fund”Yet it turned out that Agarwal, now 26, had borrowed $2 billion to finance his share of the purchase from financial institutions, including Japan’s Mizuho Financial Group Inc., people familiar with the matter have said. Son himself personally guaranteed the loans to Agarwal, according to another person familiar with the matter. Mizuho declined to comment.In addition, two earlier investors in Oyo were Didi and Grab, the ride-hailing companies backed by SoftBank. That raises the question of whether money used to boost their valuations was then reused to hike the value of another SoftBank investment.SoftBank did not disclose Son’s personal role in the deal or the bank loans to Agarwal. Ultimately, the Vision Fund decided it wouldn’t mark up its Oyo stock to the $10 billion valuation because the latest funding did not include independent investors.In a statement, Oyo said it is grateful for the support of investors including the Vision Fund. “We are a well-run company with a healthy balance sheet and a strong focus on business economics, and the same can be seen in the continued momentum we’ve seen in reducing our net losses,” it said. “We have great business relationships with both Didi and Grab since late 2017 and early 2018 when the fundraising had not happened.”Analysts trying to make sense of SoftBank’s valuations have been frustrated by what they view as a lack of transparency in such cases. SoftBank doesn’t discuss in detail the standards by which it values a particular startup or accounts for such gains as profit on its income statement. “SoftBank has offered little visibility into how they value their investments,” says Jefferies Group senior analyst Atul Goyal.Masafumi Takeno represented Japan on the IFRS Foundation committee that developed materials explaining how to use valuation guidelines. He said companies have broad discretion to determine asset values and disclosures. “The rules are pretty loose and permissive,” he said.For years, Son has expressed frustration that investors don’t see the value of his business. In presentations, he will often focus in on how SoftBank’s market capitalization is below the value of its assets, including publicly traded stocks like Alibaba. In February, he opened an event with a slide that showed: “25 – 4 = 9?” The point he was making is that SoftBank held assets worth 25 trillion yen—including a 12.5 billion yen stake in Alibaba—and had only 4 trillion yen in debt. Yet investors bestowed a value of 9 trillion yen on SoftBank, a discount of more than 60%. “It’s just beginner math,” Son said. “This is too cheap.”The SoftBank discount narrowed after that presentation with the help of a stock buyback and the impending IPOs for companies like Uber. On its website, Son’s company ran daily calculations of assets minus debt to show what the share price should be. But with the WeWork implosion, SoftBank’s market cap has dropped back below 9 trillion yen and the discount has widened again to more than 60%. The stock has dropped 30% since its April peak, though it’s still up 15% for the year. Shares reversed morning gains on Tuesday and dropped almost 1%.“Markets are telegraphing that the trust is gone,” said NYU’s Damodaran. “Masa needs to rebuild that.” (Updates with share price in penultimate paragraph)\--With assistance from Lulu Chen, Saritha Rai, Yoolim Lee and Takahiko Hyuga.To contact the authors of this story: Peter Elstrom in Tokyo at pelstrom@bloomberg.netPavel Alpeyev in Tokyo at palpeyev@bloomberg.netTo contact the editor responsible for this story: Adam Majendie at adammajendie@bloomberg.netFor more articles like this, please visit us at bloomberg.com©2019 Bloomberg L.P.

  • New report says Softbank may have last laugh on Wework
    Yahoo Finance Video

    New report says Softbank may have last laugh on Wework

    Will Softbank have the last laugh when it comes to WeWork? A new report by analyst Chris Lane at Bernstein says Softbank's massive investment could still pan out if overhauls the start ups business plan.

  • Shareholders slam SoftBank after WeWork debacle: The Wall Street Journal
    Yahoo Finance Video

    Shareholders slam SoftBank after WeWork debacle: The Wall Street Journal

    Investors are expressing their displeasure with SoftBank's string of poor investment decisions, according to a new report from The Wall Street Journal. Yahoo Finance's Jennifer Rogers, Myles Udland, and Heidi Chung discuss the latest.

  • SoftBank's Bookkeeping Under Fire After WeWork

    SoftBank's Bookkeeping Under Fire After WeWork

    Nov.26 -- SoftBank's investment model is now under fire after Masayoshi Son boosted the equity in office-sharing startup WeWork only to see it plummet as investors balked at enormous losses and troublesome governance. Bloomberg's Sarah McBride has more on "Bloomberg Markets."

  • Softbank under scrutiny after WeWork failure
    Yahoo Finance Video

    Softbank under scrutiny after WeWork failure

    Softbank is under fire by its shareholders, according to the Wall Street Journal, after WeWork failed to go public, on top of other poor investments. Yahoo Finance's Akiko Fujita joins On the Move to discuss the latest.