Office leasing company WeWork files for IPO, but it kinda seems like maybe it's just a ponzi scheme?

[Ricofoley]

Imagine investing in this:

 

Quote

Similarly, MKM Partners’ Rohit Kulkarni said in a note Friday that investors would “have to take a big leap of faith in order to believe that WeWork would show signs of a sustainable economic model” given the rising costs across its 528 locations. He said WeWork could soon find itself strapped for cash.

 

“At an estimated $1500-200mn in cash burn per month, we believe the company has about six months in execution runway ahead before facing a cash crunch,” Kulkarni wrote in a research note.

 

 

Quote

After WeWork rebranded to become The We Company in April, it adopted a complicated corporate structure, called an umbrella partnership corporation, or Up-C.

 

In effect, this turned WeWork into a limited liability company, with The We Company overseeing it and joint ventures in Asia, as well as other related entities, such as its fund ARK Capital Advisors, which oversees global real estate management and acquisitions. (The acronym stands for Adam, Rebekah and Kids, in reference to his wife -- who’s listed as a co-founder and wields significant influence at the company -- and their five children.)

 

The Up-C structure has tax benefits for Neumann and other executives, as they’ll be able to pay tax on any profits at an individual income-tax rate, according to the Financial Times. Meanwhile, public shareholders will be subject to double taxation, since the holding company will be taxed on income and investors will pay another tax on dividends.

 

 

https://www.cnbc.com/2019/08/17/wework-ipo-filing-strangest-and-most-alarming-things.html

 

Here's another, similarly bewildered take:

 

https://www.theverge.com/2019/8/15/20806366/we-company-wework-ipo-adam-neumann

 

 

 

[Amazatron]

But hey, a valuation of $47 billion so as long as the VCs can cash out, it's all good!

[RedSoxFan9]

Real estate developer and Silicon Valley tech genius?! How can you not trust him

[Commissar SFLUFAN]

WeWork May Be Intentionally Misleading Investors Ahead Of Its IPO

Quote

According to CEO Rett Wallace at Triton Research, The We Company’s S-1 lacks crucial information required to build a model of the startup’s financials. According to him, “the prospectus is a masterpiece of obfuscation” adding that “if the underlying facts were positive, why would a company go to so much trouble to prevent you from understanding them?”

 

NYU professor calls WeWork 'WeWTF,' says any Wall Street analyst who believes it's worth over $10 billion is 'lying, stupid, or both'

Quote

GAAP accounting standards got you down? No problema at WeWTF. We has begun reporting "Community-based EBITDA," profitability before the BITDA, but is also taking out expenses, including real-estate, that comprise the bulk of cost required to deliver the service. A more honest description of the metric would be "EBEE, Earnings Before Everything Else."

 

[Jason]

2 minutes ago, SFLUFAN said:

WeWork May Be Intentionally Misleading Investors Ahead Of Its IPO

 

NYU professor calls WeWork 'WeWTF,' says any Wall Street analyst who believes it's worth over $10 billion is 'lying, stupid, or both'

 

 

This isn't very We of you. 

[b_m_b_m_b_m]

6 minutes ago, Jason said:

 

This isn't very We of you. 

Oui oui!

[TwinIon]

I feel like this is such a flashback to the .com boom. I look at a company like Uber, one that might never make any money, and at least there's a good idea at the heart of it that shifted a whole market. This isn't a good idea, it's not changing markets, it's just debt funded nonsense. If you're in one of their buildings taking advantage of it, good for you, but I'd keep any money far away from this whole debacle. I can't believe it's lasted this long.

[CitizenVectron]

6 minutes ago, TwinIon said:

I feel like this is such a flashback to the .com boom. I look at a company like Uber, one that might never make any money, and at least there's a good idea at the heart of it that shifted a whole market. This isn't a good idea, it's not changing markets, it's just debt funded nonsense. If you're in one of their buildings taking advantage of it, good for you, but I'd keep any money far away from this whole debacle. I can't believe it's lasted this long.

 

Yeah exactly. Uber will probably go under in the next few years, but the general idea makes sense if they were charging more money (and if the market would pay it). So the business model makes sense, it's mostly just about the figures.

[Ricofoley]

Uber's stated business plan for eventually becoming profitable is to just develop self-driving cars and eliminate the cost of labor. Which kinda almost makes sense for a half second, until you actually really think about the fact that a) what they pay drivers now is complete shit and b) they'd suddenly be on the hook for all of the overhead costs that would go into storing and maintaining an entire fleet of cars that they currently don't have to deal with. Then there's the fact that none of the companies currently trying to develop self-driving tech seem to be able to get over the hump and make them work in a practical situation without a "back-up driver" in the front seat.

[Commissar SFLUFAN]

THIS is DEFINITELY worth listening to 

 

 

[Ricofoley]

WeWork's IPO evaluation might be half of the original price, or may just be delayed altogether

 

https://www.businessinsider.com/wework-valuation-cut-20-billion-may-delay-ipo-report-2019-9

[RedSoxFan9]

https://www.businessinsider.com/peloton-to-raise-as-much-as-12-billion-in-ipo-shares-priced-26-to-29-2019-9

 

a challenger appears

[RedSoxFan9]

 

[CitizenVectron]

I still don't understand what this company is or what it does. Any tl;drs?

[Commissar SFLUFAN]

13 minutes ago, CitizenVectron said:

I still don't understand what this company is or what it does. Any tl;drs?

It's a Ponzi scheme that doubles as a lessor of co-working locations.

 

Quote

WeWork's business model is to purchase/lease office space, fix it up to create a community feel, and sublease it by the day or month to freelancers or small businesses.

 

[Chris-]

10 minutes ago, CitizenVectron said:

I still don't understand what this company is or what it does. Any tl;drs?

They run co-working spaces; they provide the space, furniture, amenities, etc., and small businesses or start-ups rent desks/office/suites in the space. There has literally never been a profitable co-working space company, because somehow everyone involved loses money.

[CitizenVectron]

Okay so they are landlords/property managers. But because they rent by the day or by the desk, they are somehow part of the current tech bubble and therefore are cooler and worthy of billions of dollars in investment which will disappear.

[Jason]

5 minutes ago, CitizenVectron said:

Okay so they are landlords/property managers. But because they rent by the day or by the desk, they are somehow part of the current tech bubble and therefore are cooler and worthy of billions of dollars in investment which will disappear.

 

You primarily interface with WeWork through an app. I'm pretty sure that's the only reason they get lumped in as technology.

[SimpleG]

 

[RedSoxFan9]

 

[Jason]

WeWork C.E.O., Adam Neumann, Stepping Down Under Pressure https://nyti.ms/2moCZM4

[Jason]

WeWork’s IPO Backpaddling Leaves Israel’s Two Largest Banks at Risk

 

[Commodore D]

2 hours ago, Jason said:

WeWork’s IPO Backpaddling Leaves Israel’s Two Largest Banks at Risk

 

Investors and tenants, “WeWoke.”

[Ricofoley]

So today's big unicorn IPO debut was Peloton, whose big, paradigm-shifting idea is "what if an exercise bike, but with the internet." Down 11% in the first day of trading.

 

https://www.cnbc.com/2019/09/26/peloton-ipo-valued-between-consumer-hardware-and-platform-companies.html

[Commissar SFLUFAN]

4 hours ago, Ricofoley said:

So today's big unicorn IPO debut was Peloton, whose big, paradigm-shifting idea is "what if an exercise bike, but with the internet." Down 11% in the first day of trading.

 

https://www.cnbc.com/2019/09/26/peloton-ipo-valued-between-consumer-hardware-and-platform-companies.html

Jim Cramer totally trashed Peloton a few days ago:

https://www.cnbc.com/2019/09/23/jim-cramer-approach-unicorns-going-public-with-caution.html

[Anathema-]

So strange how all this expensive niche tech that relies on a large and vibrant middle class to buy it keep failing over and over.

[Jason]

5 hours ago, SFLUFAN said:

Jim Cramer totally trashed Peloton a few days ago:

https://www.cnbc.com/2019/09/23/jim-cramer-approach-unicorns-going-public-with-caution.html

 

[RedSoxFan9]

The target audience for Peloton is wealthy professionals who probably don’t have time to use it and will drop the subscription service after not using it for months

[TwinIon]

You can add Wag, the Uber for dog walkers app, to the pile.

 

After raising $400M and reaching valuations around $600M, they had problems working at scale, particularly with customer service and dealing with incidents. Apparently, it's a problem for a dog walking app when dogs run away or die.

[Pikachu]

WeWork will withdraw IPO

[RedSoxFan9]

 

[Ricofoley]

This is a good read, and I'd highly recommend clicking through to the blog posts linked in the first paragraph as well. He makes something of a bombshell prediction in the second post that the Softbank Vison Fund, which also funds Uber and Door Dash and a bunch of other companies, is going to die in the next 12 months.

 

http://nymag.com/intelligencer/2019/10/marketing-expert-scott-galloway-on-wework-and-adam-neumann.html

[Commissar SFLUFAN]

11 hours ago, Ricofoley said:

This is a good read, and I'd highly recommend clicking through to the blog posts linked in the first paragraph as well. He makes something of a bombshell prediction in the second post that the Softbank Vison Fund, which also funds Uber and Door Dash and a bunch of other companies, is going to die in the next 12 months.

 

http://nymag.com/intelligencer/2019/10/marketing-expert-scott-galloway-on-wework-and-adam-neumann.html

I read a theory that SoftBank ABSOLUTELY DID NOT want WeWork to pull off the IPO because it would have forced a significant writedown in the valuation of its investment in the company.

 

Oh, I'm so a big fan of Scott Galloway!

[TheGreatGamble]

On 9/27/2019 at 1:31 PM, RedSoxFan9 said:

The target audience for Peloton is wealthy professionals who probably don’t have time to use it and will drop the subscription service after not using it for months

My gym has Pelotons, they are amazing bikes. 

 

But yeah, not a very stable IPO. 

[RedSoxFan9]