6 ms·

Even $10 billion feels too high. I wonder what they were thinking when they filed the S-1. That after reading that document, we'd all be inspired by the vision

Even $10 billion feels too high. I wonder what they were thinking when they filed the S-1. That after reading that document, we'd all be inspired by the vision and clearly see the ~$40 billion valuation, and see opportunity for growth on top of that, such that the public would want to invest as it grew beyond 40? The trust in this company and its leadership is gone, and it will be difficult to correct. Perhaps the quarterly announcements will save them in a year, if it's shown to be a profitable business.

mrweasel 7y ago
Regus, which I recall correctly is valued at around 4.5b USD, so WeWork should be less than that, but not proportionally so, given their much better branding.
- nugget 7y ago
  I'm more skeptical of WeWork's culture and valuation than most, but I will give them credit for creating the best quality product in the market. When I need conference or office space in various cities I don't compare WeWork to Regus, I just find the nearest WeWork space and book there. Our portfolio companies do the same. For people who travel often, there is a subtle network effect that provides value. Regus is irrelevant in this sense, and irrelevance can be particularly deadly for valuation. Perhaps Regus can re-invest into their brand to become competitive - and I hope they do, because more competition would be healthy.
- JMTQp8lwXL 7y ago
  WeWork could have a substantially different portfolio of real estate assets. I think looking at Regus isn't a bad idea, but then consider it in the context of what WeWork has (though, I am not privy to knowing how many, if any, of WeWork's real estate assets are "paid off").
  - ivalm 7y ago
    Most of them are rented not owned by weworks. WeWorks is in the business of subleasing.
    - fragmede 7y ago
      Many of them are owned by Adam Neumann, who then leases it back out to WeWork.
      - ivalm 7y ago
        By many you mean 4 [0] out of 833 [1]. I agree that the fact the number is not 0 by now is somewhat unsavory, but at this point with all of wework expansion it's basically a rounding error (those 4 locations were among the first for weworks). [0] - https://www.bloomberg.com/news/articles/2019-08-14/wework-gave-founder-loans-as-it-paid-him-rent-ipo-filing-shows https://www.bloomberg.com/news/articles/2019-08-14/wework-ga... [1] - https://www.wework.com/locations https://www.wework.com/locations
        unreal37 7y ago
        It's still a massive conflict of interest. The company lent him the money to buy those properties. Let's say in 2021, when WeWork is running out of money and needs to renegotiate its leases with landlords, is Adam going to lose money on that deal, or will WeWork magically avoiding needing to cut lease payments to him...? Massive conflict of interest. We seems to be designed to make Adam rich as it's primary business purpose.
- intuitionist 7y ago
  WeWork has virtually the same number of desks as IWG/Regus, so it’s unclear why their valuation should be lower.
  - Barrin92 7y ago
    regus makes money instead of burning it
  - JMTQp8lwXL 7y ago
    Regus could own their buildings. We mostly does not.
  - unreal37 7y ago
    We is losing 50 cents for every $1 they earn. And that scales as they gain more customers. Hard to figure how they are going to cut expenses 30% or double the cost of renting from them...
macspoofing 7y ago
>I wonder what they were thinking when they filed the S-1. This-is-a-rickety-ship-that-won't-last-another-year-so-let's-cash-out-asap.
- JMTQp8lwXL 7y ago
  I get the sense that with some of these companies, the time to IPO is the peak valuation the company will ever achieve. That seems to be the name of the game today, to maximize returns for early investors. Legally, I don't know if there is an issue with that, but I see a moral one: you shouldn't be bringing a company public if you can't think it will grow further. It's a misuse of the public markets. And we can count many companies in 2019 and 2018 who's valuations peaked at IPO.
  - turk73 7y ago
    This is precisely why I'll never buy IPO stocks ever again. I got tired of being someone else's bagholder. The IPO is just the final stage of the scam after all other monies are raised and profits are made.
  - lmm 7y ago
    > Legally, I don't know if there is an issue with that, but I see a moral one: you shouldn't be bringing a company public if you can't think it will grow further. It's a misuse of the public markets. How so? The point of a market is for willing sellers to make deals with willing buyers. What person would sell a company (or any asset) when they thought the public market undervalued it?
    - JMTQp8lwXL 7y ago
      Well, in the case of WeWork, a current holder of WeWork stock might "undersell" it because their basis is already so low. It's a huge profit, and you get real, hard cash in exchange for the security. It's not a bad trade if you believe the public market won't believe in your business (regardless if you think it's the best thing ever), and you also want millions of dollars.
linuxftw 7y ago
I read "as low as" as "Crazy high amount of". Is this the new scam? Announce an IPO with crazy high valuation knowing full-well it's not going to actually IPO that price, then when you adjust it lower (still way, way high valuation) people get a sense that it's a good purchase because it's so deeply discounted. They've literally reverted to department-store style sales tactics for IPOs; now I've seen it all.
- Fordec 7y ago
  Retail tactics for retail investors
empath75 7y ago
My guess is that they are going forward with the ipo because they are desperate for money and about to go under.
- fullshark 7y ago
  Don't they have to raise 3 billion at IPO to get access to 6 billion in credit? Seems like a major incentive to go for it and just annoy Softbank, especially cause one man controls the entire company.
ulfw 7y ago
I wonder what SoftBank thinks investing so much money in this. Sunk cost dilemma? Throwing too much good money after bad? No idea what to do with all the Saudi bullions? Makes one wonder.
sytelus 7y ago
WeWork has $6.6B in cash and doing $2.5B in revenue. If I use 10X revenue multiple, they would be fairly priced at around $31B. Now, there is risks on debt load, leases etc but still considering their yoy growth and possible uptick in real estate in 10 year cycle, I still think they would be cheap at or below $30B. People often try to kick the person who is fallen a bit but by Buffet style rules they are good investment opportunity in this environment. They are real business, making real money and have real growth.
- arcturus17 7y ago
  You’d seriously invest in it at a 30B valuation?
- unreal37 7y ago
  Why are you using 10X revenue multiple on a real estate company? Other RE companies are valued at 4X.[1] So $10B seems to be the value based on those numbers and their industry. However, they're losing tons of money. So that has to put them below the average. [1] http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/psdata.html http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/...

mrweasel 7y ago

Regus, which I recall correctly is valued at around 4.5b USD, so WeWork should be less than that, but not proportionally so, given their much better branding.

nugget 7y ago
I'm more skeptical of WeWork's culture and valuation than most, but I will give them credit for creating the best quality product in the market. When I need conference or office space in various cities I don't compare WeWork to Regus, I just find the nearest WeWork space and book there. Our portfolio companies do the same. For people who travel often, there is a subtle network effect that provides value. Regus is irrelevant in this sense, and irrelevance can be particularly deadly for valuation. Perhaps Regus can re-invest into their brand to become competitive - and I hope they do, because more competition would be healthy.
JMTQp8lwXL 7y ago
WeWork could have a substantially different portfolio of real estate assets. I think looking at Regus isn't a bad idea, but then consider it in the context of what WeWork has (though, I am not privy to knowing how many, if any, of WeWork's real estate assets are "paid off").
- ivalm 7y ago
  Most of them are rented not owned by weworks. WeWorks is in the business of subleasing.
  - fragmede 7y ago
    Many of them are owned by Adam Neumann, who then leases it back out to WeWork.
    - ivalm 7y ago
      By many you mean 4 [0] out of 833 [1]. I agree that the fact the number is not 0 by now is somewhat unsavory, but at this point with all of wework expansion it's basically a rounding error (those 4 locations were among the first for weworks). [0] - https://www.bloomberg.com/news/articles/2019-08-14/wework-gave-founder-loans-as-it-paid-him-rent-ipo-filing-shows https://www.bloomberg.com/news/articles/2019-08-14/wework-ga... [1] - https://www.wework.com/locations https://www.wework.com/locations
      - unreal37 7y ago
        It's still a massive conflict of interest. The company lent him the money to buy those properties. Let's say in 2021, when WeWork is running out of money and needs to renegotiate its leases with landlords, is Adam going to lose money on that deal, or will WeWork magically avoiding needing to cut lease payments to him...? Massive conflict of interest. We seems to be designed to make Adam rich as it's primary business purpose.
intuitionist 7y ago
WeWork has virtually the same number of desks as IWG/Regus, so it’s unclear why their valuation should be lower.
- Barrin92 7y ago
  regus makes money instead of burning it
- JMTQp8lwXL 7y ago
  Regus could own their buildings. We mostly does not.
- unreal37 7y ago
  We is losing 50 cents for every $1 they earn. And that scales as they gain more customers. Hard to figure how they are going to cut expenses 30% or double the cost of renting from them...

macspoofing 7y ago

>I wonder what they were thinking when they filed the S-1. This-is-a-rickety-ship-that-won't-last-another-year-so-let's-cash-out-asap.

JMTQp8lwXL 7y ago
I get the sense that with some of these companies, the time to IPO is the peak valuation the company will ever achieve. That seems to be the name of the game today, to maximize returns for early investors. Legally, I don't know if there is an issue with that, but I see a moral one: you shouldn't be bringing a company public if you can't think it will grow further. It's a misuse of the public markets. And we can count many companies in 2019 and 2018 who's valuations peaked at IPO.
- turk73 7y ago
  This is precisely why I'll never buy IPO stocks ever again. I got tired of being someone else's bagholder. The IPO is just the final stage of the scam after all other monies are raised and profits are made.
- lmm 7y ago
  > Legally, I don't know if there is an issue with that, but I see a moral one: you shouldn't be bringing a company public if you can't think it will grow further. It's a misuse of the public markets. How so? The point of a market is for willing sellers to make deals with willing buyers. What person would sell a company (or any asset) when they thought the public market undervalued it?
  - JMTQp8lwXL 7y ago
    Well, in the case of WeWork, a current holder of WeWork stock might "undersell" it because their basis is already so low. It's a huge profit, and you get real, hard cash in exchange for the security. It's not a bad trade if you believe the public market won't believe in your business (regardless if you think it's the best thing ever), and you also want millions of dollars.

linuxftw 7y ago

I read "as low as" as "Crazy high amount of". Is this the new scam? Announce an IPO with crazy high valuation knowing full-well it's not going to actually IPO that price, then when you adjust it lower (still way, way high valuation) people get a sense that it's a good purchase because it's so deeply discounted. They've literally reverted to department-store style sales tactics for IPOs; now I've seen it all.

Fordec 7y ago
Retail tactics for retail investors

empath75 7y ago

My guess is that they are going forward with the ipo because they are desperate for money and about to go under.

fullshark 7y ago
Don't they have to raise 3 billion at IPO to get access to 6 billion in credit? Seems like a major incentive to go for it and just annoy Softbank, especially cause one man controls the entire company.

ulfw 7y ago

I wonder what SoftBank thinks investing so much money in this. Sunk cost dilemma? Throwing too much good money after bad? No idea what to do with all the Saudi bullions? Makes one wonder.

sytelus 7y ago

WeWork has $6.6B in cash and doing $2.5B in revenue. If I use 10X revenue multiple, they would be fairly priced at around $31B. Now, there is risks on debt load, leases etc but still considering their yoy growth and possible uptick in real estate in 10 year cycle, I still think they would be cheap at or below $30B. People often try to kick the person who is fallen a bit but by Buffet style rules they are good investment opportunity in this environment. They are real business, making real money and have real growth.

arcturus17 7y ago
You’d seriously invest in it at a 30B valuation?
unreal37 7y ago
Why are you using 10X revenue multiple on a real estate company? Other RE companies are valued at 4X.[1] So $10B seems to be the value based on those numbers and their industry. However, they're losing tons of money. So that has to put them below the average. [1] http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/psdata.html http://pages.stern.nyu.edu/~adamodar/New_Home_Page/datafile/...