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SoftBank’s $100 Billion Promise to Trump is More Than Its Entire Market Cap
In a bombshell announcement, SoftBank Group CEO Masayoshi Son and President-elect Donald Trump jointly announced a commitment of $100 billion in U.S. projects over the next four years, with the promise to create at least 100,000 new American jobs in artificial intelligence and other emerging technologies. However, the staggering pledge raises questions about how the Japanese tech conglomerate plans to finance its promise, as its entire market cap is only a mere $97 billion.
The commitment eclipses an earlier pledge made by Son during Trump’s first term, which aimed to invest $50 billion with a goal of creating 50,000 jobs. SoftBank did fulfill its 2016 vow of $50 billion, with investments in companies such as Slack and DoorDash. However, it remains unclear whether the company was able to create the promised number of jobs.
The announcement has left many wondering how SoftBank plans to fund its revised commitment, particularly since it only has $29 billion in cash on hand. While Son did not provide any details about how the company intends to meet its promise, Trump seemed unworried, stating that he had “looked at their books” and believes they have the ability to do more.
The commitment is over the span of Trump’s presidency, providing SoftBank with ample time to raise the necessary funds. In reaching out for comment, Forbes was unable to elicit a response from SoftBank on how it intends to finance its pledge.
Despite the uncertainty surrounding the funding, SoftBank has been making significant investments in AI-related companies, including a reported $1.5 billion investment through an employee tender offer last month. Additionally, the company announced plans to commit $9 billion annually to AI investments, though it failed to specify where these bets would be placed.
In related news, several tech executives have attempted to curry favor with Trump as he returns to power. Facebook parent Meta, Amazon, and OpenAI have reportedly pledged to donate $1 million each to Trump’s inauguration fund, joining Tesla CEO Elon Musk and venture capitalist Marc Andreessen in their efforts to ingratiate themselves with the incoming president.
SoftBank is best known for its Vision Fund, a $100 billion venture fund announced in 2017 that aimed to invest in tech companies worldwide. However, the fund gained notoriety for its missteps, including an ill-fated investment in coworking real estate company WeWork, resulting in an $18 billion loss.
Source: http://www.forbes.com
