SoftBank invests $2 billion in WeWork
The Japanese bank puts billions more into the co-working company.
SoftBank has stepped up its investment in WeWork, the upstart co-working company. The Japanese conglomerate is putting an additional $2 million into the business. Though the amount is less than the expected $16 billion, it’s still a substantial number. This latest action makes the total venture worth about $10 billion.
Why SoftBank is betting big on WeWork
WeWork is a successful office space provider for businesses in over 25 countries. The company has become so popular that it’s abandoning its old name to become We Company to expand beyond spaces for workers. Chief executive officer, (CEO), Adam Neuman, said the name change is to ‘encompass all aspects of people's lives, in both physical and digital worlds.’ SoftBank has noticed the growth of the company and is now betting its investment will create more expansion and eventually profits for WeWork. This latest venture increases the business’ value to $47 billion
Is WeWork worth billions?
While the office space company has grown to 100 cities, WeWork is not yet profitable. The startup has reported a $723 million loss in 2018. Financial analysts like, Alex Snyder, from investment firm CenterSquare, noted that WeWork has to increase profits soon to avoid being seen as overvalued.
'The valuation is going to take a significant amount of growth to justify it,’ said Snyder.
SoftBank’s Saudi Arabia Controversy
SoftBank has been under fire recently for funding WeWork from its Vision Fund, which is backed by the kingdom of Saudi Arabia. The country has been criticised for its role in the murder of journalist Jamal Khashoggi. Many venture capitalists in tech are urging conglomerates like SoftBank not to do business with Saudi Arabia’s controversial prince, Mohammed bin Salman. Investors and even human rights activists will be watching to see how this partnership between SoftBank and WeWork will unfold.
IGA, may distribute information/research produced by its respective foreign affiliates within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.
The information/research herein is prepared by IG Asia Pte Ltd (IGA) and its foreign affiliated companies (collectively known as the IG Group) and is intended for general circulation only. It does not take into account the specific investment objectives, financial situation, or particular needs of any particular person. You should take into account your specific investment objectives, financial situation, and particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit.
Please see important Research Disclaimer.
See an opportunity to trade?
Go long or short on more than 17,000 markets with IG.
Trade CFDs on our award-winning platform, with low spreads on indices, shares, commodities and more.
Live prices on most popular markets
Prices above are subject to our website terms and agreements. Prices are indicative only. All shares prices are delayed by at least 15 mins.