Jack Ma quits SoftBank board after $18B Vision Fund loss

Tech giant SoftBank posted an investment loss of roughly $17 billion in its fiscal year ended in March. Yahoo Finance’s On The Move panel discuss.

Video Transcript

JULIE HYMAN: Right now, though, we've got to talk about SoftBank because that company continues to struggle, just announced a $17 billion investment loss in its Vision Fund for this fiscal year just ended, as well as, overall, a SoftBank net loss of $9 billion for the full year. Jack Ma, the co-founder of Alibaba, is going to be stepping down from the SoftBank board as well.

Dan Howley, you've been covering this and tracking this for us. I mean, SoftBank, it seems like they can't get a break, right? They keep sort of making some unwise bets, one could say.

DAN HOWLEY: Yeah, obviously, the least wise going to be WeWork, that company that lost billions, and then, essentially, now, with COVID-19, shutting down a lot of businesses, not doing any business of its own because they can't allow people into offices. According to reports, out of the various companies that the Vision Fund has in its portfolio, the 88, some 15 will go bankrupt, and then another 15 will probably ride it out successfully, while the rest will just kind of hang in there without getting any kind of return on investment.

So this is something that the Vision Fund, you know, originally, set up to be this big gangbusters fund that they would use to help these kinds of startups that they thought could really change the world, the Ubers, along those lines, the WeWorks, kind of just faltered because COVID-19 has shuttered most of the economy. They were already suffering, as a result of WeWork and the debacle that happened there. And then for the companies that they are investing in to just have to stop work down almost entirely has really put a serious dent in it.

And, obviously, Jack Ma, you said, leaving from the board, Masayoshi Son and him used to be very close friends, used to have dinner regularly. You don't expect that to be the same going forward, even though Son had invested heavily in Alibaba in its early stages, but did, by the way, come out really far ahead on that investment to the tune of billions of dollars.

ADAM SHAPIRO: Well, they-- they once valued WeWork at $47 billion. Going forward, have they said-- have they given any indication with the reset that everyone is expecting in commercial real estate? Some firms won't need permanent office space. The WeWork model seems to be the way to go. Might they see an upside coming?

DAN HOWLEY: Yeah, you know, there-- there have been talks about, you know, potentially, a bankruptcy for WeWork, but Son has not said that or gone as far as to say that. You do have to think that there will be more companies coming and starting up.

And they may rely on something along the lines of a WeWork model just to get their own office space set up going forward, as their-- the economy kind of resets. But that's a company that was so highly valued and then plummeted so quickly, just because the balance sheets didn't really add up, that, you know, it's hard to imagine it being able to rebound to the point where it was originally when it was valued so highly.

RICK NEWMAN: Hey, guys. I was at the Milken Institute Conference in LA last year, just about a year ago, a little over a year ago. And Mike Milken interviewed Rajeev Misra who is the CEO of the Vision Fund. And, you know, this-- this room full of, you know, rich financiers were in awe of this guy and of the Vision Fund. And Milken would ask him questions like how do you do it. How do you find all these great investments?

I'm just bringing that up to point out the turnabout here. It's really amazing. And it's also interesting to me that this is a lot of Saudi money and Middle Eastern money. And you just wonder is that spigot just going to turn off. Or will they keep the faith in Masa Son and the guys running this fund?

DAN HOWLEY: Yeah, I mean, it's been kind of a-- it was really on the up and up, I think, as far as trajectory when, I think, the money was just coming out of the faucets really. And, now that it's been turned off to a degree, as a result of the various shutdowns going on, and then, you know, kind of the investigations into the Vision Fund and how the upper echelons of that function, I think people may be more wary of it going forward.

And, yeah, it has been soaked with Saudi money for some time, Uber in particular, but I think there's going to be some kind of reckoning due for the Vision Fund. And, you know, there was supposed to be talk of a Vision Fund 2, right? That may not happen now, based on the performance of the investments for the original Vision Fund.

RICK NEWMAN: I mean, the investment strategy was basically spread the money everywhere. And I think they're going to have to change that strategy.

DAN HOWLEY: Mhm.

JULIE HYMAN: It looks that way. It looks like the reckoning has begun. Thanks, guys.