Softbank CEO Masayoshi Son chalked up billions of investment losses to “poor judgment”.
1st time 4 everything. SoftBank tanked its first quarterly loss in 14 years, led by a hefty $8.9 billion hit at its subsidiary – Vision Fund.
Masayoshi told reporters that he’s “reflecting deeply” on his poor investment judgment.
- One is sure to stick! The Vision Fund has a reputation for throwing around cash. (They have $70 billion worth of investments in 88 of the world’s hottest startups.)
Biggest L’s. Softbank owns large stakes in some of the year’s biggest losers. The WeWork fiasco cost the bank $4.6 billion, and its investments in Uber and Slack are also struggling.
How Does It Affect My Wallet?
Private investors pump up pre-IPO valuations so they can cash out in the public market.
This strategy failed Softbank and other private buyers in 2019.
Take these IPOs for example – since their launch:
- Lyft down 53%
- Slack down 41%
- SmileDirectClub down 40%
- Peloton down 19%
(This is a cautionary tale for investors who are eager to snatch up hot companies as soon as they hit public markets).
Don’t get caught up in the hype! Pre-IPO valuations are usually well above what the market will actually pay. Even if these companies are beating earnings estimates their stock is going down because they are STILL overvalued.
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