Softbank's WeWork Rescue: Savior Economics or Sunk Cost Problem? HD

In the aftermath of the collapse of the WeWork IPO, Softbank stepped in with a rescue offer for WeWork, investing $3 billion in increasing its equity stake in the company to 80% and $5 billion in additional debt for the cash-strapped company. In this session, I look at whether this rescue mission is designed to protect Softbank from further losses or a symptom of a sunk cost problem. I also use this episode to highlight the pointlessness of fair value (price) accounting and why smart money is over rated. Finally, I examine the consequences of the WeWork fiasco for Softbank, the company, and how investors perceive the company. Slides: http://www.stern.nyu.edu/~adamodar/pdfiles/blog/SoftbankWeWork.pdf Blog Post: https://bit.ly/2XhwZD5