Softbank Group Corp. said it lost at least $4.7 billion on U.S. office-sharing company WeWork, an investment Chief Executive Masayoshi Son called an error in judgment.
SoftBank marked down the total value of WeWork’s equity to $7.8 billion, a long way from the startup’s $47 billion valuation before its attempt to go public backfired amid widespread skepticism about its profitability and management.
“My own investment judgment was really bad. I regret it in many ways,” Mr. Son said at a news conference in Tokyo after SoftBank released its earnings.
Speaking of WeWork co-founder Adam Neumann, who was ousted as CEO in September, Mr. Son said, “I shut my eyes to a lot of his negative aspects.”
For the July-September quarter overall, SoftBank recorded a net loss of ¥700 billion ($6.4 billion). Its affiliated Vision Fund and a smaller fund had an operating loss of ¥970 billion, reflecting losses on investments including WeWork and ride-hailing company Uber Technologies Inc. Uber’s stock price has skidded since its stock-market debut in May.
Mr. Son didn’t mince words in describing the earnings, saying they were a “mess” and “red ink of the deepest red.” He said it was the first time since he founded the company nearly four decades ago that it reported such a large quarterly loss.
In October, SoftBank put together a $9.5 billion bailout for WeWork, consisting of a mix of debt and equity. SoftBank said it hadn’t calculated the effect of the rescue package on its earnings.
Mr. Son said WeWork was on the road to recovery by cutting costs and eliminating unprofitable units. He said the company had “special circumstances,” but in general SoftBank wouldn’t put more funds into companies in which it had invested simply to rescue them from failure.
He acknowledged that some people think SoftBank “went to rescue a sinking WeWork by thrusting its hands and feet into the mud.”
SoftBank said that as of Sept. 30—before the October bailout—the company invested a total of $10.3 billion in WeWork, of which $6 billion came from a wholly owned SoftBank subsidiary and $4.3 billion from the Vision Fund. The $4.7 billion in losses cited by SoftBank apply to the investment by its subsidiary.