SoftBank’s earnings all the time results in a bonanza of stories. One storyline that has dominated the corporate’s earnings over the previous few years that has all however disappeared although is WeWork.
The co-working firm, which noticed its scorching-hot flame dim a number of years in the past and which has been parlayed into such books as Billion Dollar Loser, is all however invisible in SoftBank’s displays nowadays. The corporate, regardless of being one of many largest investments in SoftBank’s $98.6 billion Imaginative and prescient Fund, is not mentioned in the firm’s quarterly update, and the company’s investor presentation also has no mention of the company. (Its emblem does seem on the portfolio web page, though it’s buried with all the opposite logos.)
But, for all of the doom that has been emanating from WeWork, from its monetary shenanigans to coping with the office in a post-COVID-19 world, outcomes apparently are higher than what is perhaps anticipated.
Buried within the footnotes of SoftBank’s earnings report immediately is a few excellent news associated to WeWork. The Japanese telco conglomerate acknowledged enhancements of $1.36 billion in varied credit score amenities for WeWork in comparison with its figures within the first three months of 2020.
Given WeWork’s instability, SoftBank had put aside giant sums of capital to cowl the lease and necessary mortgage funds of WeWork with a purpose to shore up the corporate’s monetary image. Nonetheless, “primarily because of the enchancment within the credit score danger of WeWork” in line with SoftBank, the danger profile of these loans has improved fairly a bit, and the corporate not feels the necessity to provide as a lot of a monetary buffer because it did 9 months earlier.
Now, that would simply be some progressive accounting engineering, however that enchancment in WeWork’s efficiency mirrors rumors heard in current weeks that the corporate is predicted to as soon as once more try to move to the general public markets.
Final week, The Wall Street Journal reported that WeWork was looking to go public via SPAC for a rumored worth of $10 billion. No deal has but been introduced, and while SoftBank is in the process of raising two more SPACs for a grand complete of three, it’s unlikely to merge WeWork by way of its personal automobiles.
Whereas that $10 billion market cap is much beneath a few of the most bullish costs that WeWork was pumping buyers on again during its roadshow in September 2019, it nonetheless exhibits that the corporate is probably not the monetary albatross it was two years in the past.