Softbank back to black after posting record losses

The On the Move panel break down the details of SoftBank Group as the company is finally in the black after posting record losses.

Video Transcript

- Holly was just talking about the rising and falling fortunes of tech stocks. That has a lot to do with performance of the next company we're going to talk about, which is Softbank. It swung back to a profit last quarter after historic losses of $13 billion since last fiscal year. It has a lot to do with its various investments in things like Uber and Slack and also Lemonade, the online insurer.

Dan Howley, Softbank has been such an interesting company to watch. Its Vision Fund had an $18 billion loss last year. We know WeWork has something to do with its past performance as well. What stood out to you from this latest report from the company?

DAN HOWLEY: Yeah, I think one of the big things is just the kind of growth that we've seen out of the likes of Slack and Uber. Slack makes a lot of sense, just because of this current stay-at-home, work-from-home environment. A lot of companies aren't even going to be going back to work until the end of the year.

I think what's kind of strange is to see that growth out of Uber, which has been struggling, and only saw benefit out of Eats section. So those are really the two that I'm looking at. And Uber Eats, in particular, kind of playing the balancing act, I guess.

DAN ROBERTS: And, guys- I'm sure, Howley, you're watching this closely, but the ARM part of this-- the idea of Softbank looking to sell off ARM, or A-R-M. That is going to be a huge move if that happens. That would be just a mega chip deal. And we know that Softbank bought ARM. And there is a possibility that Softbank just sells off a majority stake, or even a minority stake.

But the one thing I always caution, too, when we talk about Softbank and talk about how it is or isn't doing, how the vision fund is or isn't doing, is that so much of this is just valuations on paper. You look at Slack, you look at Uber, and we say, oh, Softbank is doing better. Well, there's always a difference between counting things in terms of the valuation currently and talking about actual money coming in.

I mean, Softbank had this brutal your last year. But even so, the way this game works and the way that Masa Son knows that things work is you just need one or two mega hits. I mean, you look at that Vision Fund list, it's like, what, 20 to 30 startups. It doesn't matter if 28 of the 30 are duds if two really pan out.

So let's not close the book on Uber, obviously. Remember in the weeks or months after Uber's IPO, everyone said, oh, terrible for Softbank because the IPO hasn't gone well. Well, a year later, here we are. And Uber you know insisting that by 2021, we'll see profitability.

So this is how it goes with Softbank. It's up, it's down, because that's how the VC game works.

ADAM SHAPIRO: You talk about it being a game. But I keep hearing-- and I'm not saying Softbank is a Ponzi scheme, clearly not. But I always-- after these things fall, you always hear-- or if someone loses money, why didn't you do your due diligence?

Why do we give Softbank a pass? I mean, they've had some walloping big misses.

DAN ROBERTS: Well, I will say, Adam, that I'm with you in one sense, which is that Softbank deserves a lot of the blame-- although, I guess, if you're the startups involved, you can say credit-- for some of these hugely pumped, overinflated valuations. I mean, I've resented for a couple of years now this cycle that we all find ourselves in, where a name like Softbank or a name like Andreessen Horowitz pumps x amount of funding into x unproven startup.

And then everyone says, OK, so now here's the valuation. Well, the valuation is likely in most cases wildly overinflated. But then it's this cycle, where the startup uses the valuation that they can point to to A, raise more money, and then B, go public.

And then we look at the IPO. We say oh, it was way too hyped, way too overvalued. And then it didn't do as well. It was a dud.

Well, it all traces back to these big names like Softbank just throwing a ton of money at the wall.