Disclaimer: This is my subjective and speculative view of We Work, there is no actual publicly available data on their numbers yet to objectively judge them from, but based on every public data that I’ve been following I would conclude with these subjective remarks.
We Work now known as The We Company is set to IPO in the next few months, it is currently valued at $47B vs. its direct competitor who’s been in the sub-leasing business for the last 30 years, “Regus”.
Regus actually has bigger available sub-leased area compared to We Work as well, the circles above represent the size comparison.
Adam, one of the founders has a little over $4B of net worth in paper, that’s slightly bigger than the total value of Regus. Safe to assume his ownership is now diluted to slightly below 10%.
Softbank is the biggest backer of We Work injecting more than $10B in total, the latest being the $2B investment valuing it at $47B.
In their 2018 report, they doubled their revenue to $1.8 billion, it also doubled its losses to $1.9 billion. Obviously on the previous years of its existence it all has been purely losses as well. My read of the situation is that Softbank injected that latest $2B to get We Work to an IPO position so they can start exiting their massive stake in the company, obviously use that money to spend heavy on storytelling about why they are not just a co-working space and how they’ve diversified and have created businesses with a lot of exponential potential as well.
This is an article by New York Times which obviously I think is trying to do a click bait by adding “We Die”, I’m in a way assuming this is the writer’s way of signalling that we share the same sentiments that this is a massively OVERVALUED company with extreme levels of hype and perfect storytelling strategy.
They have 207 videos to date and continuing to release almost every single week, they started producing since 5 years ago telling unique kinds of stories revolving around “We” and all the crazy other companies they are trying to start within the We Company, like an expensive school for kids, a super high end gym, and the list goes on I don’t even know anymore what’s their focus really. Also only recently have they been producing content very regularly, totally understand coz they’re positioning to IPO and its all about road shows and hype in this period.
To sum up my thoughts, I’m definitely shorting this and predicting that it will lose probably 30–40% of its current value in around a year to a maximum of two years from its IPO date considering they have lockup periods. Why? There’s so much hype, they have We Labs, We Live, We Work, We Grow, and the list goes on, I don’t know their focus and in all those “We’s” I see cash burning everywhere its been burning since day one. Current investors are so eager to exit and making sure hype is strong as they start exiting their positions. Also they are super duper vulnerable to a recession, their whole business dies with a slight dip in the value of real estate.
Or, I could be wrong and they might be able to figure out profitability in the next few years and see a stable increase in their market value.
“WE” never really know. See how I used it there?