SoftBank Gains $16 Billion from Arm’s Earnings, Surpassing Its Total Losses in WeWork

SoftBank Gains $16 Billion from Arm’s Earnings, Surpassing Its Total Losses in WeWork

SoftBank, owned by Masayoshi Son, earned more from Arm’s after-market trading on Wednesday than the total loss it suffered from its unfortunate investment in the now-bankrupt WeWork.

Shares of Arm, a chip design company, soared up to 41% late Wednesday after it reported revenue and earnings that exceeded analysts’ predictions. SoftBank, which took Arm public in September, still holds about 930 million shares, or approximately 90% of Arm’s total stock.

Although Arm’s initial gains were reduced, SoftBank’s stake still increased by nearly $16 billion — from around $71.6 billion to $87.4 billion — following the earnings report. SoftBank bought Arm in 2016 for $32 billion, and its shares were valued at just over $47 billion at the time of the IPO last year.

The profit from Arm comes after a difficult period for SoftBank’s investments.

The company’s most notable gamble was on WeWork, which filed for bankruptcy in November after years of burning through billions of dollars of SoftBank’s cash at extremely high valuations. The Vision Fund, SoftBank’s venture capital arm, reported a $6.2 billion loss in the second quarter of 2023, linked to WeWork and other failed investments.

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In November, SoftBank informed investors that its total loss on WeWork exceeded $14 billion. In 2022, following a $32 billion loss in the Vision Fund, Son suggested that SoftBank would move from aggressive investments to a “defensive” strategy, selling stakes in Alibaba and preparing to take Arm public. Just over a year later, with the growing excitement over artificial intelligence, Son announced that SoftBank would return to an “offensive” strategy, focusing on AI investments.

However, Son is currently unable to profit from his company’s earnings from Arm.

SoftBank is subject to a lock-up provision that prevents it from selling its Arm shares, with certain exceptions, for 180 days after the company went public. Since Arm went public in September, the lock-up restriction will be lifted in mid-March.

Billionaire Masayoshi Son, chairman and chief executive officer of SoftBank, which owns Arm, speaks during a news conference in Tokyo, July 28, 2016. Image Credit: Tomohiro Ohsumi | Bloomberg | Getty Images

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