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In the immediate instance, no, WeWork does not recognize anything. But in its first month, rental income should exceed the month's depreciation for the same rea
by Tyrek 8y ago
In the immediate instance, no, WeWork does not recognize anything. But in its first month, rental income should exceed the month's depreciation for the same real estate. The fact that income has not kept up implies that occupancy is low. WeWork is fundamentally a real estate/leasing company, not a tech company.
- tfehring 8y ago> In the immediate instance, no, WeWork does not recognize anything. But in its first month, rental income should exceed the month's depreciation for the same real estate. This is accurate. > The fact that income has not kept up implies that occupancy is low. This is inaccurate. (To be clear, occupancy may be low, but WeWork's reported losses don't imply that that's the case.) If WeWork turns around and spends that rental income plus some of its investors' capital on customer acquisition expenses, it will report losses, even if those expenses bring about a net increase in the expected present value of future profits. This is just a result of the timing difference between the recognition of acquisition expenses and the revenue that they produce.