- After years of rejecting all the claims about WeWork ‘s crazy valuation, SoftBank now says the world’s largest co-working space is worth just $2.7 billion
After years of rejecting all the claims about WeWork ‘s crazy valuation, SoftBank now says the world’s largest co-working space is worth just $2.7 billion – a whopping down 94 percent from September’s earlier estimated $47 billion valuations last year. Interestingly, after the IPO fiasco that bought most of the embarrassment from WeWork’s co-founder Adam Numen and Masayoshi Friend, SoftBank spent $10 billion in WeWork bailouts.
Within a few months, though, the table has now turned. The Japanese company SoftBank has used the discounted cash flow approach to determine WeWork ‘s worth.
That unravels the tussle that began from the beginning of 2020 between SoftBank and WeWork management. Last year SoftBank agreed to pump in more capital into the business, practically owning it, to revive WeWork after the failed IPO. As part of the agreement, SoftBank agreed to buy $3 billion in stocks from Adam Neuman, the co-founder, and former WeWork CEO, along with a few other shareholders. The company set the deadline for concluding the deal as April 1, 2020.
At the beginning of 2020, however, Masayoshi Son left everyone shocked by announcing that his company would not be buying WeWork stocks. People who are familiar with the matter have disclosed that following rounds of talks and meetings between WeWork shareholder and SoftBank, Masayoshi Son has seen no interest in investing any more funds in the already troubled WeWork.
Coronavirus’s global outbreak that has resulted in a complete business shutdown worldwide has a significant impact on the real estate industry. Co-working companies are among the most impacted by the pandemic, and despite the present circumstances, the perception of the future is very somber.
WeWork is no exception; Masayoshi Son read the writing on the wall and chose to hold onto WeWork for his further investment.
The decision left stakeholders at WeWork quite baffled, and they sued SoftBank for contract breach.
In comparison, SoftBank is also grappling with its investors’ trembling trust. The Softbank Group announced a loss of 12.5 billion dollars in FY’2020 for the first time in 15 years, ending in March 2020. The much-discussed Vision Fund alone – WeWork is a part of it – has announced a massive $16.5 billion loss. Masayoshi Son surprised with a claim that 15 out of 87 portfolio companies SoftBank has invested in, could go bank corrupt.
Masayoshi Son surprised with a claim that 15 out of 87 portfolio companies SoftBank has invested in, could go bank corrupt.