WeWork Troubles Take Deeper Bite Out of SoftBank

I know it seems like I am beating up on We Work, however it is they who are beating themselves up. Why do I highlight them? They are the canary in the coalmine the way that Enron was in 2001 and Lehman brothers was in 2008. Many stocks are still overvalued on a PE basis and we have not seen the full effect of the corona virus on earnings.... Aivars Lode

SoftBank Group Corp. said steeper-than-expected losses on office-share firm WeWork pushed its expected net loss for the latest fiscal year to around ¥900 billion ($8.4 billion)—$1.4 billion more than it announced just two weeks ago.

The Japanese tech conglomerate, best known for its $100 billion Vision Fund, revised the estimate as it scrambles to calculate the hit to its bottom line from souring investments before it releases earnings on May 18 for the year ended March 31. The deeper loss comes from SoftBank’s multibillion-dollar rescue of We Co., the parent of WeWork, whose value cratered last year after investors turned wary of the company’s highflying chief executive and heavy-spending business model. 

Part of that rescue involved credit support by SoftBank for a bank commitment to lend as much as $1.75 billion to WeWork as well as up to $2.2 billion in unsecured notes to be issued by WeWork. The value of that loan commitment and guarantee has fallen, forcing SoftBank to book further write-downs, the company said Thursday. 

Icahn Says Stocks Are Overvalued, Virus May Cause ‘Downdrafts’

I have been blogging this for over a year and Covid-19 just made it real ...Aivars Lode

Carl Icahn isn’t buying stocks right now. He’s hoarding cash, shorting commercial real estate and preparing for the coronavirus to wreak more havoc.

This is a time to be “extremely careful,” Icahn said in an interview Friday on Bloomberg Television.

From his home on Miami’s Biscayne Bay, the billionaire investor has surveyed the damage to stock prices -- and to his portfolio -- and reached out to medical experts for information and opinions on the Covid-19 pandemic. To Icahn, who at 84 has traded through all the stock-market crashes since the Great Depression, the future is just too unpredictable for the S&P 500 to be trading at 17 times 2021 earnings estimates.

“You cannot really justify that multiple,” Icahn said. “Short-term, you may have some big downdrafts.”

The market disagrees. Since the Federal Reserve on March 23 unveiled a series of unprecedented measures to support the U.S. economy, followed by even more in subsequent weeks, stocks have roared back 30% from their intraday low.