WeWork is apparently doing better, not that SoftBank wants you to talk about that

SoftBank’s earnings always leads to a bonanza of news. One storyline that has dominated the company’s earnings over the past few years that has all but disappeared though is WeWork.

The co-working company, which saw its scorching-hot flame dim a few years ago and which has been parlayed into such books as Billion Dollar Loser, is all but invisible in SoftBank’s presentations these days. The company, despite being one of the largest investments in SoftBank’s $98.6 billion Vision Fund, is not mentioned in the firm’s quarterly update, and the company’s investor presentation also has no mention of the company. (Its logo does appear on the portfolio page, although it is buried with all the other logos.)

Yet, for all the doom that has been emanating from WeWork, from its financial shenanigans to dealing with the workplace in a post-COVID-19 world, results apparently are better than what might be expected.

Buried in the footnotes of SoftBank’s earnings report today is some good news related to WeWork. The Japanese telco conglomerate recognized improvements of $1.36 billion in various credit facilities for WeWork compared to its figures in the first three months of 2020.

Given WeWork’s instability, SoftBank had set aside large sums of capital to cover the rent and mandatory loan payments of WeWork in order to shore up the company’s financial picture. However, “mainly due to the improvement in the credit risk of WeWork” according to SoftBank, the risk profile of those loans has improved quite a bit, and the company no longer feels the need to offer as much of a financial buffer as it did nine months previous.

Now, that could just be some innovative accounting engineering, but that improvement in WeWork’s performance mirrors rumors heard in recent weeks that the company is expected to once again attempt to head to the public markets.

Last week, The Wall Street Journal reported that WeWork was looking to go public via SPAC for a rumored price of $10 billion. No deal has yet been announced, and while SoftBank is in the process of raising two more SPACs for a grand total of three, it is unlikely to merge WeWork through its own vehicles.

While that $10 billion market cap is far below some of the most bullish prices that WeWork was pumping investors on back during its roadshow in September 2019, it nonetheless shows that the company may not be the financial albatross it was two years ago.

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