6 ms·

Has anyone estimated how many months WeWork has until it collapses?

by gullyfur 7y ago

devmunchies 7y ago
probably better to measure in WEeks.
- jzl 7y ago
  Lol. We-eeks.
eldavido 7y ago
Is this informed by any data or facts whatsoever? Last time I checked, WeWork was a going concern with 600,000 customers more or less happy with their service. What would tank them? Are their lease obligations too large and can't be renegotiated? This entire thing is blown so far out of proportion. Like Tesla, it seems like a company that mostly makes products people like, whose equity is extremely hard to value. Maybe WeWork is worth $40 billion, maybe it's more like Regus and worth $4. This only affects you if you're a shareholder. As a WeWork customer, I absolutely couldn't care less about any of this nonsense. I'm reminded of a classic finance quote: "If I owe you $100, I have a problem. If I owe you $100 million, you have a problem." This summarizes the dynamic between WeWork and its landlords right now.
- Mtinie 7y ago
  "WeWork was a going concern with 600,000 customers more or less happy with their service." This may have been true in December 2019, but with a global patchwork "stay at home" regulations in place, I suspect co-work spaces (especially of the open floor plan variety) are devoid of paying customers. That presumes they're even allowed to be open right now. I don't remember offhand what the average WeWork customer generates in revenue or if the bulk of those customers are month-to-month vs. mid- to long-term contracts. If the former I don't see why those customers would continue to pay for space and services they don't have the ability to use.
  - fasicle 7y ago
    I know a lot of people, including myself, who have cancelled membership to WeWork due to Coronavirus. I intend to join again when we're allowed to leave our houses.
    - shard972 7y ago
      Even with the cramped open plan workspaces?
- dreamcompiler 7y ago
  They were basically insolvent when the extra Softbank cash failed and the IPO failed. And that was before COVID-19. But you make a good point: They owe so much in leases they have huge negotiating power, and with COVID-19 they probably have even more since nobody's renting space right now.
  - code4tee 7y ago
    Having a lease is not the same as “owing the bank money” to go with the loan analogy. Yes it’s painful for landlords but the landlords have options. If they kicked WeWork out they’re not just out the money in the way a bank is if a borrower defaults. There’s some short term pain but if WeWork has long leases at some point it benefits the landlords to just kick them out and move on.
    - toomuchtodo 7y ago
      Landlords have mortgages to pay. Bondholders hold those notes. There is very little slack in the system for this scale of default.
      - TheOtherHobbes 7y ago
        Some landlords have mortgages to pay. How many WW properties are still owned by Adam Neumann?
        deleted 7y ago
        [deleted]
        eldavido 7y ago
        This whole thing frustrates me so much. It's like people are just spouting off random opinions not substantiated by any data or real-world experience...at all. I just looked it up. WeWork has 848 locations globally. These locations aren't in houses...they're in gargantuan, tall office buildings, worth tens/hundreds of millions of dollars each. If Adam Neumann is a billionaire, AND if he has most of his wealth in commercial real estate (I'm sure he doesn't), he might own...5-10 of these. The rest are owned by REITs like Simon Property Group, Thor Equities, CB Richard Ellis (CBRE), Jones Lang LaSalle (JLL), and others.
- microtherion 7y ago
  My understanding is that WeWork's customers are on short term, easily cancelled leases, while WeWork's own leases are long term. In a downturn for office space, that is a recipe for disaster, and it's not like WeWork was particularly stable before the current crisis. As opposed to Tesla, WeWork's product is fairly fungible, so if general price levels for office space collapse, they don't have much of a moat to lock in customers.
tmpz22 7y ago
Anecdotally wework had a two month deposit from my former company which they are refusing to refund - my guess is 4 weeks until the civil suits start stacking up, 6 weeks until the executives bail out in Golden parachutes to cushy FANNG positions, and 8 weeks until low level employees are left holding the bag.
- blaser-waffle 7y ago
  I agree with the basic timeline but suggest doubling the timeframe.

Has anyone estimated how many months WeWork has until it collapses?

devmunchies 7y ago

probably better to measure in WEeks.

jzl 7y ago
Lol. We-eeks.

eldavido 7y ago

Is this informed by any data or facts whatsoever? Last time I checked, WeWork was a going concern with 600,000 customers more or less happy with their service. What would tank them? Are their lease obligations too large and can't be renegotiated? This entire thing is blown so far out of proportion. Like Tesla, it seems like a company that mostly makes products people like, whose equity is extremely hard to value. Maybe WeWork is worth $40 billion, maybe it's more like Regus and worth $4. This only affects you if you're a shareholder. As a WeWork customer, I absolutely couldn't care less about any of this nonsense. I'm reminded of a classic finance quote: "If I owe you $100, I have a problem. If I owe you $100 million, you have a problem." This summarizes the dynamic between WeWork and its landlords right now.

Mtinie 7y ago
"WeWork was a going concern with 600,000 customers more or less happy with their service." This may have been true in December 2019, but with a global patchwork "stay at home" regulations in place, I suspect co-work spaces (especially of the open floor plan variety) are devoid of paying customers. That presumes they're even allowed to be open right now. I don't remember offhand what the average WeWork customer generates in revenue or if the bulk of those customers are month-to-month vs. mid- to long-term contracts. If the former I don't see why those customers would continue to pay for space and services they don't have the ability to use.
- fasicle 7y ago
  I know a lot of people, including myself, who have cancelled membership to WeWork due to Coronavirus. I intend to join again when we're allowed to leave our houses.
  - shard972 7y ago
    Even with the cramped open plan workspaces?
dreamcompiler 7y ago
They were basically insolvent when the extra Softbank cash failed and the IPO failed. And that was before COVID-19. But you make a good point: They owe so much in leases they have huge negotiating power, and with COVID-19 they probably have even more since nobody's renting space right now.
- code4tee 7y ago
  Having a lease is not the same as “owing the bank money” to go with the loan analogy. Yes it’s painful for landlords but the landlords have options. If they kicked WeWork out they’re not just out the money in the way a bank is if a borrower defaults. There’s some short term pain but if WeWork has long leases at some point it benefits the landlords to just kick them out and move on.
  - toomuchtodo 7y ago
    Landlords have mortgages to pay. Bondholders hold those notes. There is very little slack in the system for this scale of default.
    - TheOtherHobbes 7y ago
      Some landlords have mortgages to pay. How many WW properties are still owned by Adam Neumann?
      - deleted 7y ago
        [deleted]
      - eldavido 7y ago
        This whole thing frustrates me so much. It's like people are just spouting off random opinions not substantiated by any data or real-world experience...at all. I just looked it up. WeWork has 848 locations globally. These locations aren't in houses...they're in gargantuan, tall office buildings, worth tens/hundreds of millions of dollars each. If Adam Neumann is a billionaire, AND if he has most of his wealth in commercial real estate (I'm sure he doesn't), he might own...5-10 of these. The rest are owned by REITs like Simon Property Group, Thor Equities, CB Richard Ellis (CBRE), Jones Lang LaSalle (JLL), and others.
microtherion 7y ago
My understanding is that WeWork's customers are on short term, easily cancelled leases, while WeWork's own leases are long term. In a downturn for office space, that is a recipe for disaster, and it's not like WeWork was particularly stable before the current crisis. As opposed to Tesla, WeWork's product is fairly fungible, so if general price levels for office space collapse, they don't have much of a moat to lock in customers.

tmpz22 7y ago

Anecdotally wework had a two month deposit from my former company which they are refusing to refund - my guess is 4 weeks until the civil suits start stacking up, 6 weeks until the executives bail out in Golden parachutes to cushy FANNG positions, and 8 weeks until low level employees are left holding the bag.

blaser-waffle 7y ago
I agree with the basic timeline but suggest doubling the timeframe.