WeWork Valued at 35 Billion

[SharperDingaan]

Opened the S-1 after reading all the hoopla about WeWork. The first two sentences are:

 

"We are a community company committed to maximum global impact. Our mission is to elevate the world’s consciousness."

 

For some reason, it reminds me of Sardar Biglari.

 

Vinod

 

if the current business doesn't work, they can always diversify into weed to achieve their mission  :D

 

WeHigh?

 

Dial A Bud - coming to a location near you!

https://weedmaps.com/deliveries/dial-a-bud

 

With soon to be added weed infused Vape Juice - as the healthy lungs alternative!!

https://vapesinthehood.com/make-thc-vape-juice/

 

SD

 

 

 

[DTEJD1997]

Whoopsie Oopsie!

 

Seems like WeWork backers now want to shelve the IPO, possibly until October:

 

Please see:

 

https://www.businessinsider.com/wework-will-likely-delay-its-ipo-report-2019-9

 

Some old timers have told me that the stock market becomes volatile in October.  Could be difficult to do an IPO then?

 

How this thing is even worth $1, beats me!

[Nomad]

https://www.wsj.com/articles/this-is-not-the-way-everybody-behaves-how-adam-neumanns-over-the-top-style-built-wework-11568823827

 

 

Mr. Neumann has told several people over the past two years that a personal goal is to become the world’s first trillionaire.

 

...

 

Ms. Neumann, a first cousin of actress and wellness guru Gwyneth Paltrow, has said she and Mr. Neumann clicked when they first met, when Mr. Neumann was broke and struggling to make a business.“It felt like time stopped,” she told a podcast interviewer last year. “I just knew he was the man that was, hopefully, going to help save the world.”

 

Maybe he can join these guys? http://img.timeinc.net/time/magazine/archive/covers/1999/1101990215_400.jpg

[Castanza]

https://amp.businessinsider.com/wework-ceo-adam-neumann-layoffs-firing-tequila-shots-run-dmc-2019-9

 

Simply amazing

[Deepdive]

It is interesting that the article mentioned that in VC funding rounds, Adam can use his charisma to charm the investors.  The public market isn't getting that front row seat and tend to be more skeptical of the company. 

[Spekulatius]

https://amp.businessinsider.com/wework-ceo-adam-neumann-layoffs-firing-tequila-shots-run-dmc-2019-9

 

Simply amazing

 

I wish I have gotten tequila shots every time people got fired in the company I worked for. I don’t think I would have been sober at work in late 2000 and 2001 at all. The more I think about it, so more I like the idea.

[DTEJD1997]

Hey all:

 

I know everybody's favorite website here is "Zerohedge"!  Obviously, you've got to take their stuff with a grain or two of salt...but today they've two pretty damning articles on the "WeWork" bidness.

 

I wonder if "WeWork" has a location at the corner of 8-Mile & Gratiot in Detroit?

 

Please see:

 

"Is WeWork a Fraud?":  https://www.zerohedge.com/markets/wework-fraud

 

and

 

https://www.zerohedge.com/markets/wework-business-model-systemic-risk-economy-feds-rosengren-warns

 

Could a WeWork implosion be the trigger for a wider recession?  Maybe?

 

Interesting times are certainly on the way!

[UK]

https://www.wsj.com/articles/some-wework-board-members-seek-to-remove-adam-neumann-as-ceo-11569171188

 

A bloc of WeWork directors is planning to push Adam Neumann to step down as chief executive after a tumultuous week in which his eccentric behavior and drug use came to light, and the startup delayed its much-anticipated stock-market listing.A group including officials tied to SoftBank Group Corp. , the company’s largest investor, wants Mr. Neumann to relinquish his title of CEO of We Co., the parent of the office-sharing company, people familiar with the matter said.

[Spekulatius]

None of this would have mattered if the news hadn’t picked up on this and the IPO had gone through. The board of directors and Son would have nodded to everything Neumann would have proposed.

[JRM]

https://seekingalpha.com/article/4292925-wewtf-part-deux

 

Entertaining as well.

[SharperDingaan]

https://seekingalpha.com/article/4292925-wewtf-part-deux

 

Entertaining as well.

 

 

We  f##ked!

 

SD

[John Hjorth]

https://seekingalpha.com/article/4292925-wewtf-part-deux

 

Entertaining as well.

 

We  f##ked!

 

SD

 

... We has gone from unicorn to distressed asset in 30 days. ...

 

First time in life where I have seen this English grammar being right! [ ; - D ]

[Read the Footnotes]

Adam Neumann will step down as CEO. He will remain on the board as non-executive chairman.

 

https://www.cnbc.com/2019/09/24/wework-ceo-adam-neumann-is-expected-to-step-down-amid-controversy-and-retain-chair-role-wsj-reports.html

[SharperDingaan]

Adam Neumann will step down as CEO. He will remain on the board as non-executive chairman.

 

https://www.cnbc.com/2019/09/24/wework-ceo-adam-neumann-is-expected-to-step-down-amid-controversy-and-retain-chair-role-wsj-reports.html

 

We get tequila shots too :D

https://www.businessinsider.com/wework-ceo-adam-neumann-layoffs-firing-tequila-shots-run-dmc-2019-9

 

According to The Journal, during an all-hands meeting at WeWork's New York City headquarters, Neumann described those layoffs as necessary to cut costs. Moments later, employees at the meeting were served shots of tequila — there were toasts and more drinks, and the evening ended with a performance by Darryl McDaniels of Run-DMC. Don Julio 1942 tequila costing more than $100 per bottle?

 

SD

[Spekulatius]

Softbank / Son are the Hunt brothers of venture capital :

https://www.foxbusiness.com/financials/softbank-buy-wework-shares-ipo

https://www.investopedia.com/articles/optioninvestor/09/silver-thursday-hunt-brothers.asp

 

Even back then, Saudi‘s were involved as well.

[DooDiligence]

Softbank / Son are the Hunt brothers of venture capital :

https://www.foxbusiness.com/financials/softbank-buy-wework-shares-ipo

https://www.investopedia.com/articles/optioninvestor/09/silver-thursday-hunt-brothers.asp

 

Even back then, Saudi‘s were involved as well.

 

I was working for Petrol Marine at the time.

 

They were owned by the Hunt Brothers, along with Penrod, Placid, Pumpkin Air & others.

 

We were breaking depth records for setting anchors on semi-submersibles that were drilling in Green Canyon (that's where I trained on both the Kodiak I & II for deep water anchor work) & the Hunt Brothers were breaking the bank.

 

I can't remember, but they must have had 6 or more of these things working (fishing the bouy spreads for Mahi Mahi was amazing).

 

It took 4 boats to set & retrieve 8 anchors per semi (now you could do it with 2, but everyone uses dynamic positioning drill ships).

 

It took 2 boats per anchor with 1 acting as chase boat (holding the anchor) & the other adding or removing extension wires to the chain (the rigs lacked enough storage capacity in their legs).

 

At the time we only had one set of shark jaws & no pop-up pins.

 

Now a boat will usually have 2 sets of shark jaws & 1 set of pop-ups with top locking pins which is way safer for the anchor crew.

 

A lot of deep water technology came out of this project & they burnt up all of Daddy's cash to do it.

 

https://www.nytimes.com/1987/09/27/magazine/the-hunt-brothers-battling-a-billion-dollar-debt.html

 

https://www.chicagotribune.com/news/ct-xpm-1990-02-05-9001100692-story.html

 

---

 

Will the Son implode in such spectacular fashion?

[Guest cherzeca]

reporting on FT that We will stop signing new leases with landlords (I dont subs so no link).  this should serve to reduce expenses and enable an analysis of whether a steady state We can be profitable. some adults decided owning leases on >500 major market office buildings might be enough growth, and that it was time to manage to a profit. We might also want to drop the consciousness raising schtick while they strive for profitability.

[Spekulatius]

reporting on FT that We will stop signing new leases with landlords (I dont subs so no link).  this should serve to reduce expenses and enable an analysis of whether a steady state We can be profitable. some adults decided owning leases on >500 major market office buildings might be enough growth, and that it was time to manage to a profit. We might also want to drop the consciousness raising schtick while they strive for profitability.

 

I think this one could go from $35B in valuation to bankruptcy in record speed. Someone twittered that with equity market closed, the bonds now start to get into trouble. Then there will be a cascade down to owners of RE too.

 

You have got to admire Neumann here. He made hundred of millions with a total unviable business that didn’t even make it to the IPO.

[Guest cherzeca]

public equity market closed but vision fund is ready to double down. as for bankruptcy, might happen in a downturn, but stopping the expansion is the best way to try to stabilize

[Jurgis]

reporting on FT that We will stop signing new leases with landlords (I dont subs so no link).  this should serve to reduce expenses and enable an analysis of whether a steady state We can be profitable. some adults decided owning leases on >500 major market office buildings might be enough growth, and that it was time to manage to a profit. We might also want to drop the consciousness raising schtick while they strive for profitability.

 

I think this one could go from $35B in valuation to bankruptcy in record speed. Someone twittered that with equity market closed, the bonds now start to get into trouble. Then there will be a cascade down to owners of RE too.

 

You have got to admire Neumann here. He made hundred of millions with a total unviable business that didn’t even make it to the IPO.

 

Almost made even more.

 

Sometimes big balls can carry you far.   8)

[UK]

https://www.wsj.com/articles/virtually-no-one-will-lease-to-wework-thats-a-drag-on-nycs-office-market-11569762002

 

The vast majority of New York City landlords have little interest in taking on WeWork as a new tenant while the company is struggling to shore up its finances, brokers and landlords say.

 

Other big U.S. office markets could also suffer from the current aversion to WeWork. Building owners in cities including Chicago, Boston, Los Angeles and San Francisco have relied heavily on WeWork to fill excess space and to appeal to startup companies attracted to co-working’s layouts and ethos. Co-working tenants occupy 54.2 million square feet nationally and more than 16.5 % of office demand since the beginning of 2017 can be attributed to WeWork and other co-working firms in 54 major U.S. markets, according to data firm CoStar Group Inc.

 

S&P Global Ratings on Thursday said it cut a We entity’s credit rating to the lower junk rating of single B-minus from single-B, reflecting “heightened uncertainty around The We Company’s ability to raise capital to support aggressive growth and the pressure this places on liquidity,” S&P said in a press release.

 

WeWork also became a favorite New York tenant in part because it was sometimes willing to pay above market rents to keep its growth firing. In one recent instance, WeWork made a verbal offer to lease up to 80,000 square feet in a Midtown Manhattan tower—paying a 20% premium to the market rate for space that wouldn’t be available for two years, said Craig Deitelzweig, chief executive of Marx Realty, the building’s owner. But Mr. Deitelzweig said he turned the deal down because he was suspicious of WeWork’s business model. “The numbers do not work,” he said.7

[SugarRE]

Does anyone know how to buy WE bonds in a PA?  My first attempt got me shut out of schwab as they are private.

 

Thanks in advance.

[Nomad]

https://www.wsj.com/articles/softbank-seeking-to-take-control-of-wework-through-financing-package-11571002488

 

SoftBank has hired lawyers from Weil, Gotshal & Manges LLP, a corporate law firm known for its financial-restructuring specialists, to help sort through We’s finances and advise on the potential investment, some of the people said.

 

Already putting the bankruptcy lawyers on retainer? That was fast.

[Cigarbutt]

From reported numbers and other inputs, it is interesting to try to come up with a 'breakeven' occupancy number and to define the path to profitability. Changing course (lowering growth) even without extrinsic economic shocks needs to incorporate the facts that: 1-We has paid a dear price for some leases, 2-We has included lower or free rent concessions for a while in some contracts and 3-We has committed significant capital to improve the value of the space for renters.

 

If you are SoftBank, what do you do? You double down!

This has the ingredients to become a story where the equity seemed cheap at 50B and will seem expensive at 5B. Then they say markets are efficient.

http://aswathdamodaran.blogspot.com/2019/09/runaway-story-or-meltdown-in-motion.html

https://www.hbs.edu/faculty/Publication%20Files/Final%20Version%20WeWork%20Article%20HBS%20Header_91efe3b9-fc0b-408b-b29e-d7d365a245b2_f7f6a0fa-cf26-4caa-99cc-3653fc8e6dc6.pdf#page25

 

 

 

[DTEJD1997]

Hey all:

 

Looks like the founder, Adam Neumann is out at WeWork.

 

Everything is not too bad for him though.  In order for him to bow out AND sell his shares back to the company, he is exiting with about $1.7BB.  Not too bad a pay day!

 

According to Business Insider, a lot of employees are "pissed" at that amount of money.

 

Are they "pissed" because of the low valuation of the company?  Thus hurting their stock/options value?  Or maybe that Neumann got so much $$$$ with the company losing money by the TRAINLOAD, broken business model, and being on the verge of insolvency?

 

I wonder how much capital Softbank will put behind WeWork?

 

Seems to me that if you have a multibillion company that is losing $1 for every dollar in revenue, you don't really have a valid business model?