
WeWork considers IPO valuation of as low as $10B - aresant
https://www.reuters.com/article/us-wework-ipo-valuation-exclusive/exclusive-wework-considers-ipo-valuation-of-as-low-as-10-billion-sources-idUSKCN1VY1PB
======
roymurdock
Matt Levine as usual called how this would play out. He said we work would
start dropping the weird voting/control privileges ("corporate governance
concessions") that founders have enjoyed on recent "tech" IPOs. He also said
investors wouldn't care much and this latest news confirms that.

His conclusion: "But now WeWork seems to be facing the traditional tradeoff:
Stay private, keep control, but lose access to billions of dollars of funding,
or go public, raise unlimited money, and have to act normal. If it does either
of those things, that will mark a sort of end of an era. At the height of the
unicorn boom, big tech companies could stay private without giving up the
benefits of being public, or they could go public without taking on the
burdens of being public. Now they might have to make hard choices again."

~~~
acchow
"that will mark a sort of end of an era. At the height of the unicorn boom,
big tech companies could"

Except WeWork isn't a tech company.

~~~
pearjuice
They have successfully marketed themselves as one and apart from a relatively
small group, the common denominator perceives them as such.

~~~
acchow
According to wikipedia "WeWork investors as of 2014 included J.P. Morgan Chase
& Co, T. Rowe Price Associates, Wellington Management, Goldman Sachs Group,
the Harvard Corp., Benchmark, and Mortimer Zuckerman, former CEO of Boston
Properties"

They basically convinced a bunch of non-tech investors that they're a tech
company.

~~~
ackbar03
I'm pretty sure the banks invested just to get a shot at collecting fees for
ipo work

------
bhupy
Seems to be in line with Aswath Damodaran's valuation estimate.

"From my perspective, this seems like an optimistic story, where WeWork
generates pre-tax operating income of 10.07 billion on revenues of $80.5
billion in 2029, generating a 26.61% return on capital on intermediate capital
investments. Allowing for a starting cost of capital of about 8%, the
resulting value for the operating assets is about $29.5 billion, but before
you decide to put all your money in WeWork, there are two barriers to
overcome:

Possibility of failure: The debt load that WeWork carries makes its
susceptible to economic downturns and shocks in the real estate market, and
the cost of capital, a going concern measure of risk, is incapable of
capturing the risk of failure embedded in the business model. I will assume a
20% chance of failure in my valuation, and if it does occur, that the firm
will have to sell its holdings for 60% of fair value.

Debt load: As I noted in the last section, the company has accumulated a debt
load, including lease commitments, of $23.8 billion.

Adjusting for these, the resulting value of equity is $13.75 billion, and with
my preliminary assessment of shares outstanding, translates into a value per
share of about $26/share."

Highly recommended read for those that haven't already:
[http://aswathdamodaran.blogspot.com/2019/09/runaway-story-
or...](http://aswathdamodaran.blogspot.com/2019/09/runaway-story-or-meltdown-
in-motion.html)

~~~
Androider
Note that Aswath is detailing a best-case scenario for WeWork here, where
they're somehow making $80.5B revenue in 2029. That's... a bit of a stretch,
seeing as they'd have to 26x their current 2019 revenue. Are they going to buy
out every building in Manhattan? So we can say the fair pricing is somewhere
between $0 and Aswath's $13B.

Personally, I feel that no matter what price WeWork IPOs at, it's going to
pancake pretty hard. There's a good business in there somewhere (AWS for real-
estate), but it's saddled under so much crap, debt, and hot air.

~~~
Twirrim
> There's a good business in there somewhere (AWS for real-estate)

Is there? I keep looking at the WeWork thing as a complete outside, someone
who's never had to deal with that sector, and it's just not clear to me what
is actually different/innovative about what they do.

~~~
Androider
Leasing office space in a place like NY traditionally required at least a one
year lease, often longer. WeWork has at least popularized the notion of
extremely flexible month-to-month contracts for fully managed facilities in
historically expensive markets, which is very attractive to virtually all
companies (now is that a sustainable business remains to be seen, but at least
the demand is there). Not just small companies and startups, but companies of
all sizes like the flexible opex that can be scaled on short notice. WeWork's
S1 shows that a big chunk of the customer base and growing is in fact large
companies. E.g. Microsoft in New York has their entire sales organization
scattered across WeWork properties. That kind of thing is where WeWork appears
to be doubling down on according to their S1, not really the freelancer hot-
desk market.

Companies also generally don't like to deal with anything that is not core to
their business. Already previously most functions were outsourced (cleaning,
maintenance, stocking the fridge etc.) but increasingly companies don't even
want to deal with the hassle of sourcing a supplier. Or getting Internet. Or
insurance. WeWork makes all of that a non-issue. So does Regus Spaces product,
but it has to be at least acknowledged that it's a direct reaction to WeWork.

I think the future will look something like this, and why it can be likened to
AWS for physical space (WeWork doesn't go this far yet, today requiring e.g.
physically visiting the space before leasing which is honestly a pain-in-the-
ass speaking as someone looking to place multiple people all over the US, just
let me input my credit card already):

\- Startup company in the Bay Area logs in online and clicks to reserve a 1x
Private Office in NYC, for the two new hires starting there next week. No
tour, no calls, no interaction with anyone at WeWork. WeWork is already a
"known quantity" (kind of like McDonald's), no need for any of that process.

\- Microsoft manager in Redmond does absolutely nothing workplace related as
his new hire just shows up at WeWork Houston, as the company already has a
direct expensing agreement. His cost center is just billed X for the month
automatically.

~~~
fragmede
AWS-for-office-space is apt, considering EC2 instances/other VPS are paid per-
hour(/minute) but AWS owns the computers for the duration.

As been pointed out elsewhere though, WeWork, owes money to landlords, even if
that WeWork space is empty. AWS doesn't have the same contracts with their
computers. Or do they? It's entirely possible AWS buys their server farms on
credit rather than all upfront. AWS, of course, is a different beast, having
the backing of Amazon.com.

Thus the more useful debate, rather than rehash the "is it a tech company"
argument yet again, is what _is_ a reasonable valuation for WeWork? Enterprise
Value for IWG is 9.8B; so a 10B valuation for WeWork is not totally
ridiculous.

There's a risk that everyone will just work from home during a recession.
During that same recession though, we'll also want to move our company's
website from AWS to a desktop computer I have in my garage that I leave on all
the time, to save money.

~~~
mehhh
Moving a website from AWS to a desktop at home isn't apt to save money, as
your power bill will increase by $20 to $50 a month.

Transitioning to shared hosting in the single digit cost per year category is
more likely, no need to pay a premium to serve HTML.

------
JMTQp8lwXL
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
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.

~~~
intuitionist
WeWork has virtually the same number of desks as IWG/Regus, so it’s unclear
why their valuation should be lower.

~~~
Barrin92
regus makes money instead of burning it

------
templatewe
Wow! How did they come up with this valuation? I assumed the bankers that were
part of this deal would have based their valuation on something solid. But
this is an 80% discount in a span of 6 weeks. Something is seriously not right
with this company. It seems like its build on a house of cards.

~~~
Ilverin
Quote from Matt Levine:

[https://www.bloomberg.com/opinion/articles/2019-09-09/we-
mig...](https://www.bloomberg.com/opinion/articles/2019-09-09/we-might-not-be-
working)

Well, I just got through saying that there’s not really any reward for being
pessimistic and right about valuation when you are pitching an IPO. Your
optimistic competitors will get the mandate, and then spend some time walking
the company back

...

On the other hand it is a repeat game and there are occasionally penalties for
getting it wrong:

...

it will be rough for Morgan Stanley if winning the biggest IPO prize [Uber] of
the unicorn era loses it the biggest IPO prize of all time [Saudi Aramco]

~~~
dehrmann
> Saudi Aramco

Complete aside, but the ~second largest oil producing country is selling part
of its state-owned oil company. Yes, they're trying to diversify so they're
not just a petrostate, but this should be a red flag for the oil industry.

------
nabdab
“As low as” Isn’t it still tons higher than a fair market evaluation compared
to other rental companies? I mean I get that they “own the word We” and
branded themselves a tech company. But when you strip away those jokes, they
are just a b2b rental company that’s bleeding money month after month.

I feel like the real news is that rather than drop the IPO in the face of
severe disillusion they(SoftBank) are actually trying to recoup some of their
losses while cutting the company down, rather than comfortably pursuing the
valuation that they previously seemed to push as being a reasonable
possibility.

------
hendzen
I wonder how history will look back on Reid Hoffman's book, "Blitzscaling".
The premise seems bit ridiculous now in light of recent problems at WeWork and
Uber.

~~~
mrosett
I haven't read the book, but WeWork doesn't seem to fit the principles of
Blitzscaling. They haven't been able to dominate their market (office space)
in the same way that Google owns search or Airbnb owns home rentals. A quick
search for "Reid Hoffman WeWork" returns no relevant results other than him
investing in a possible competitor:

[https://media.thinknum.com/articles/how-liquidspace-is-
under...](https://media.thinknum.com/articles/how-liquidspace-is-undermining-
everything-wework-is-setting-out-to-do/)

~~~
hn_throwaway_99
> They haven't been able to dominate their market (office space) in the same
> way that Google owns search or Airbnb owns home rentals.

I disagree. First of all, WeWork's market isn't really 'office space', it's
short-term, flexible, furnished office space, and in the sense of "market
domination" I think WeWork is very similar to AirBnB in that regard. That is,
while they both have strong competitors who predate them (e.g. Expedia/VRBO
and Booking.com both have huge short-term rental businesses), they both
certainly lead in the "mindshare" of their particular markets.

The main difference is just that the economics of AirBnB's model (they neither
own nor lease any real estate for rent) is much more profitable than WeWork's.

~~~
adrr
Airbnb owns the peer to peer market rental. WeWork isn’t even close to the
size of regus. Airbnb can expand by dropping money into marketing. We work
needs to do huge outlays to buy/lease buildings and also drop money into
marketing to grow.

~~~
fragmede
_> WeWork isn’t even close to the size of Regus._

They both manage ~45 million sq feet of office space. Regus isn't chasing tech
IPO valuations as they went public in 2000.

------
jekoei9
I think a big perception issue in the general public that the money people are
chafing against after doing their homework is that WeWork isn’t a tech
company.

Economically they’re more like a b&m retailer, where the shelf space being
leased is for workers, not mannequins and clothes.

Their reach to individual pockets is orders of magnitude smaller. Big clients
can abandon them as a supplier in a few weeks time to setup a new office.

WeWork does not have the long term emotional buy-in potential like an Apple or
Facebook. It’s a business to business business. Not going to hook a billion
individual users on their gadgets and services.

There’s a non-zero chance the property market implodes, and shifts to remote
workers seem very likely to expand. Still need phones and software. Not
downtown offices with cucumber water.

~~~
danko
It's true there's a non-zero chance the property market implodes, but the
shift to remote workers is exactly what WeWork is counting on. Many (even
most) people chafe at working in their living space 100% of the time, and
squatting in coffee shops and the like also has its limits. People generally
need a work place that is separate from their living place, even if their work
place is not the same work place as the rest of their company. Throw in the
need for quiet places, conference rooms, whiteboards, etc, and before you know
it...

~~~
notyourday
This an an extremely unsexy long-term market that provides very solid returns
in exchange for lots of work. That is why management companies have very low
valuation even compared to REITs. It is a market where you hire Jamel and Jose
who have been building supers for twenty years and who know what's on sale
today in the Home Depo and what kind of light bulbs should be hoarded rather
than Jack who will order stuff on Amazon because Jack will overpay by 220% by
buying that stuff for just-in-time on Amazon and over a period of 10 years
those mistakes are going to be a $100k difference in opex per location.

A company that gives an engineer budget to deck out his desk is fundamentally
incompatible with a slow and steady way of making money in real estate
management.

------
situational87
This is getting comical. They keep intentionally leaking lower and lower
numbers trying to gauge any level of interest.

I feel like a scammer on the corner is getting increasingly desperate shouting
lower numbers at me as I walk away. "No how about just $5 then and I'll read
your palm!"

People used to have shame. This is so weird.

------
benj111
The Unicorns wander out of the enchanted forest, and turn out to be just
horses with a stick stuck to their head.

Theres been much hand wringing about the sky high valuations, and its not
really surprise when push comes to shove, those valuations don't play out. How
a $65 billion potential valuation (or $47bn 'actual') becomes a $10bn float
will be a write up I look forward to though.

~~~
askafriend
A couple of bad companies don't characterize an entire market.

Have you forgotten about the successes already? Slack, Zoom, Pinterest,
PagerDuty, Okta, Cloudflare, Twilio, Shopify, Twitter, LinkedIn, Facebook,
Roku, Elastic, etc etc.

They all IPO'd this decade and are enormously successful and have justified
their valuations.

This is a Softbank-specific problem. Not a problem with all companies.

~~~
benj111
I'm not saying they're bad companies, just that they've been blown up to
mythical proportions, Unicorns don't exist, their tears won't cure all
ailments, they don't fart rainbows, and Wework is probably more reasonably
valued as a property company, not a tech company.

Facebook fell after it's IPO by quite a lot btw.

------
lordnacho
Is anyone informed about the consequences of such a down-round? I haven't kept
an eye on their incoming investments, but you'd think there might be some
unhappy investors there with various clauses in their terms?

This has probably been the most criticised IPO I've heard of in recent times.
Interesting that the market is actually not allowing them to sail right
through on their own terms, it's as if all the ridicule actually makes people
think about whether to buy it.

~~~
jannotti
I've been trying understand this too. If you have a liquidation preference on
your preferred shares that says you get your money out before others, does
that just go away in an IPO? If it applies, how? Because it's not like there's
a buyer who is putting up the entire market cap in cash.

But if it goes away, that's kind of an amazing loss of value for those
holders. Do they have to agree to the IPO? (Maybe usually they do, but here
Adam has super voting rights?)

~~~
thedudeabides5
Lots of people rambling their opinions here, but agree with this thread that
having some actual information on what the consequences of such a down round
would be, given the liquidity preference in their venture rounds.

Crunchbase says $12.8bn of prior investment.

Wouldn't that mean with a 1x liquidation pref that all the employees
(including the CEO) would get wiped out?

~~~
thedudeabides5
[https://www.crunchbase.com/organization/wework/funding_round...](https://www.crunchbase.com/organization/wework/funding_rounds/funding_rounds_list)

------
laser
As WeWork has raised $12.8 billion [1], that would be quite a devastating
repricing. I would think they would just remain private at that price, but
maybe they need the cash and no private investors will give it to them.

[1]
[https://www.crunchbase.com/organization/wework/funding_round...](https://www.crunchbase.com/organization/wework/funding_rounds/funding_rounds_list#section-
funding-rounds)

~~~
benj111
I think they have $6bn in loans lined up contingent on selling $3bn worth of
shares.

So pulling out would put a hole in their expansion strategy. It may also be
that they would be unable to get such an offer for $6bn again, bearing in mind
the now much lower valuation. But then the vision fund has deep pockets, as do
its investors so who knows.

------
leshokunin
This feels like death by IPO. They’ve signaled that both the public and
private market aren’t interested. Now they have to choose to stay private and
keep control, or go public and raise 80% less than initially planned, while
giving away control. The best move (in hindsight) would have been not to try
to IPO.

Have there been other examples of companies getting gutted by their IPO
efforts?

(Another interpretation would be that they are a real estate company trying to
pass for a tech company and everyone called their bluff).

------
echelon
This is much different from $47 billion. They know that we've caught on to the
sham, and now the investors just want liquidity so they can dump this mess
onto others. They're hoping some will see this as a bargain so they can still
get an exit.

Don't trust this.

------
jillesvangurp
WeWork has close to 300K members and they've been growing massively. I'm not
sure how much they charge on average but lets assume it is at least around 300
dollars per month; probably more.

So, that should generate up to 100M per month and well over a billion a year.
They're reported revenues are actually closer to 2 billion. So, obviously they
either make way more per user or I missed something here. Either way, this is
apparently generating quite nice revenue.

They have cost of course but it does not sound like a horrible business. They
charge a premium to their users and from what I've seen in various locations
in Berlin and SFO, they tend to cram in a lot of people in their locations and
maximize the usage of the spaces they lease. So, I'd say it's safe to say that
each We Work location ought to be profitable with some nice margins.

From what I understand the reason they are burning cash is simply rapid
growth. They are investing every penny they can get in more locations. Based
on all of this. A valuation of 10B for a company that seems on track to grow
to billions in profit per year sounds on the low side to me. Also, with that
kind of revenue, they should increasingly be able to fund growth from their
own revenues.

Long term threats to WeWork's business exist of course. Fundamentally they
don't have a lot of tech or intellectual property protecting them from
competitors. Most of their competitive advantage simply comes from their scale
and presumably optimized operations and access to capital.

I'd say it's similar to the hotel business which is also dominated by big
chains of hotels. So, long term you'd expect more competition to emerge and a
race to the bottom in terms of prices and operational cost. E.g. the Hilton
group owns hundreds of hotels world wide with probably tens of thousands of
beds and seems roughly comparable to wework in terms of number of buildings
and revenue. The only difference is of course that they've been around for
very long whereas WeWork has existed less than a decade. Fundamentally, if
they mature a bit there's no good reason why they should not be massively
profitable even if they get a bit of competition; which they currently only
have from much smaller companies.

------
cj
Just to get a sense of IPO pricing incentives:

Who benefits when an IPO like this is underpriced? And who benefits when an
IPO is overpriced?

Is there anyone incentivized to price an IPO accurately?

~~~
ganitarashid
Insiders cashing out is more important than anything apparently

~~~
cj
Insiders can't cash out until after the lock up period, after which the price
should have stabilized to whatever the market think it's worth, right? (So the
IPO price isn't as important as the price the market settled on a few months
later, by that logic)

Or is that thinking too simplistic?

~~~
oarsinsync
Unfortunately, yes.

Softbank has taken out loans secured with Uber stock during the lock up
period.

If the value of Uber tanks, Softbank retains the money, and the bank takes the
stock. Softbank has effectively sold their stock ahead of time, removing any
downside risk.

On the flip side, if Uber stock goes up, Softbank can sell their Uber stock
(post-lockup) at a profit, pay back the loan, and enjoy all the upside reward.

I'm reasonably sure I've read reports that they've taken out secured loans on
their Wework stock too. Effectively sold the downside risk before IPO.

Also, depending on what category of investor you are, you have liquidation
preferences. You may be the one providing the stock that's being sold _at_
IPO.

~~~
skinnymuch
In the We Co. case at least, selling the stock at a $10B valuation won’t do
SoftBank much good when they’ve plowed $9B into the company.

It’ll be interesting if they indeed have taken out these loans against We
stock. And especially how much.

------
shosko
I think WeWork is still a bit ahead of its time. Some see its value as
culture, others see it as real estate. The ways we live and work are changing,
but changing any culture takes time. I still feel that We Work is creating the
future, but that value is still based on change that's inherently slower than
we'd like.

~~~
mises
> Some see its value as culture, others see it as real estate.

Can you point me to more information on the "culture" point of view? I have
trouble seeing what kind of culture we work has, let alone how a culture can
be monetized. But what's special about its "culture", any way? Real estate is
at least valuable; for a while, I wondered if it would turn into the world's
weirdest REIT. What future is it creating?

~~~
michaelt
According to their S-1 [1]

 _We are a community company committed to maximum global impact. Our mission
is to elevate the world’s consciousness. We have built a worldwide platform
that supports growth, shared experiences and true success.

[...]

We start by looking at space differently: as a place to bring people together,
build community and enhance productivity. Philosophically, we believe in
bringing comfort and happiness to the workplace

[...]

Nine years ago, we had a mission to create a world where people work to make a
life, not just a living. We believed that if we created a community that
helped people live life with purpose, we could have a meaningful impact on the
world.

[...]

Each of our spaces is designed to make our members feel welcome and at home,
and to encourage a sense of belonging. We believe that individuals are more
productive when they are able to express their full and authentic selves, so
we aspire to be as inclusive as possible._

As a grumpy cynic personally I don't really go for that stuff, but they've put
it in the prospectus so presumably they think other people do.

[1]
[https://www.sec.gov/Archives/edgar/data/1533523/000119312519...](https://www.sec.gov/Archives/edgar/data/1533523/000119312519220499/d781982ds1.htm)

~~~
mises
That sounds more like a continuation of the trend toward turning prospectuses
into marketing materials. "Looking" and "believing" don't translate into
concrete action. All this is marketing-speak, and I don't think any of it
contributes real value.

~~~
michaelt
You might very well think that, and it sounds like you won't be investing. But
presumably people who believe "culture" is what makes WeWork a good investment
are used to investing in intangible things.

~~~
Androider
Don't go confusing the kool-aid drinking employees of WeWork with the people
investing in WeWork. The 80% haircut on the IPO pricing (to date) is the
institutional investor's saying "no thanks" to exactly that type of feel-good
BS being spouted in the S1.

------
buboard
So they can claim to overshoot their target? The investors will be very
pleased.

OTOH this reeks of desperation to "go public", and drop the hot potato on
clueless investors while they 're still clueless and the market is still hot.
Sounds sinister tbh

------
kmfrk
This is basically a Dutch auction as IPO at this point.

~~~
Basketb926
[https://en.wikipedia.org/wiki/OpenIPO](https://en.wikipedia.org/wiki/OpenIPO)
"OpenIPO is a modified Dutch auction" "number of companies public including
Morningstar, Interactive Brokers Group, Overstock.com, Ravenswood Winery,
Clean Energy Fuels, Boston Beer Company"

WeWork is experiencing this type of auction but strangely in the media instead
of in communications between actual investors

------
LargeWu
I know this has been covered before, but WeWork isn't really a tech company.
They're a real estate company. They buy buildings and then rent space. And
they certainly don't scale the same way tech companies do.

~~~
mbesto
This trope is going to die soon (as its discussed on twitter and HN like
weekly now).

"Tech company" is an operating model, not an industry/market. "We" is a real
estate leasing/operating company heavily enabled by tech.

~~~
dclusin
The distinguishing feature of a tech company is a marginal cost of servicing
an additional customer approaching 0. Spending insane amounts of money
carelessly and calling yourself a tech company doesn't make you one.

~~~
KaoruAoiShiho
There has to be a better definition than this, that's true for any company
with great economy of scale.

~~~
lozaning
Im a big fan of this article defining what is and isnt a tech company:
[https://stratechery.com/2019/what-is-a-tech-
company/](https://stratechery.com/2019/what-is-a-tech-company/)

------
brosinante
I can't believe we might lose the free beer on tap after this, it's an
outrage.

------
ulfw
Still too much for what it is. Shady real estate play with a shady CEO. Why
are we even pretending this is tech?

------
adrianmonk
To me, WeWork seems like one of those businesses whose success might be based
on a novel but easily-duplicated idea.

After they blaze the trail of providing a different approach to office space,
is there a lot to stop competitors from doing the same thing?

Maybe there are more, but I only see two advantages they have over
competitors: name recognition and economies of scale. And since leasing space
is a large expense for tenants, it's natural for people to shop around a bit,
making it a natural area for competition (and driving down margins).

WeWork's web site uses the word "revolutionary". Once the revolution has
finished happening, what reason is there to believe that WeWork is going to
own it? Obviously WeWork has a head start, but is there anything they've done
that others can't do?

------
impalallama
So why does everyone so interested in WeWork's IPO evaluation? Non trying to
be sassy just genuinely curious why articles like seems are so regularly
posted.

~~~
duxup
To some extent Uber is like watching a Unicorn car accident, you can't look
away.

It also is a good example of these dirty Unicorns that are not unlike Uber
where folks for quite a while wonder "How can you be profitable and operate
like that?" and we're all amazed the market keeps rewarding them ... and it
seems like we're to the point where the market might not reward them.

~~~
jellicle
Wile E. Coyote has run off the edge of the cliff and yet his legs are still
going and he isn't falling. But at some point he will stop, look down, look at
the camera, and then fall a long, long way.

We're just waiting for the look down.

------
jgalt212
if $10B is real, that might be the end of Vision Fund II.

~~~
mrnobody_67
Add in Brandless, Wag, and Doordash and a couple others... hard to see how
giving Nuro $1b for self-driving delivery robots will return 40% annualized.

Can anybody point to significant investments ($1b+) in their portfolio that
will return 5x-10x?

~~~
twic
Sometimes i wonder if the whole Vision Fund is actually a CIA plot to bankrupt
certain Middle East oil states.

------
DebtDeflation
And now Softbank is going to buy at least 25% of the shares issued in the IPO.
Either they're true believers in the valuation (i.e., that $10-15B is a steal)
or this is a last ditch attempt to salvage the IPO.

------
duxup
With all the bad karma / news out there at this point, what are the odds that
they can get any significant money publicly ... and maybe privately now that
so much dirty laundry is out there?

------
brown9-2
They were previously hoping to raise $10B from the IPO, how much are they
hoping to raise now?

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1024core
One economic downturn and WeWork is history.

I wouldn't touch this one with a 10-foot pole.

~~~
misiti3780
if it goes public, short it!

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gigatexal
Um... is Masayoshi Son reeling now that Softbank invested at a ~40B valuation?

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cr0sh
What should really be the shocking thing is that somehow, 10 billion is
considered "low".

I don't live in SV, and I'm just a software engineer making under 6 figures,
but living comfortably all the same. I am ignorant about this "high finance"
stuff - and honestly, I'm probably better for it; less stress and all. Not
saying others shouldn't do it if that's what they like, just that I don't
think it's for me.

Still - it seems ridiculous to me that a company self-valued at 10 billion,
that there is something wrong with that? Maybe it's that I don't understand
the financial history of historical tech companies, but it "feels" to me that
such companies had no where near such value?

Part of the problem is that I can't think of such historical companies that
were similar to WeWork or other "gig-style" companies - that were contemporary
with, say, 1960s Fairchild or IBM? Those companies, and other similar
companies of that era and into the 1980s (like Sun and SGI and Motorola and
Intel, etc) - they were probably valued pretty highly (had they done such
thing as an IPO - I don't think that was an available thing then, though - but
they probably did have investors, and "ground-up" growth).

But they actually created products - physical things you could touch - as well
as software (depending on the company); they weren't just using or repurposing
existing tech on a large scale to solve a problem via a form of contract
labor. Maybe a better model that would have been contemporary to those
companies would be larger-scale construction contractors of the era? Were they
ever valued in a similar manner?

To me - in my ignorance - it just seems like all of this exists to make a
quick (overvalued) dollar and get out. I don't expect WeWork (or Lyft, Uber,
etc) to be around in 20 years. We'll just continue to have this "churn" of
companies, no loyalty or building of a base of customers that last ages and
are almost "passed down" through generations.

Think about a company like IBM - arguably, it dates back to the late 19th
century, but even discounting that, it is a computing and software company
that is close to 100 years old; will any of today's "well known" tech
companies be able to weather the years like IBM has (albeit with ups and
downs, and with scandals and such)?

I can see Apple doing it - maybe. Perhaps Microsoft and probably Google.
Amazon? I guess it could become akin to Sears or Montgomery Wards. Of course,
no one probably thought of those older brands as having the staying power that
they've shown, either - and there were plenty that one would have thought
should have stayed around that didn't, and others that did that have imploded
(ahem - Sears and Montgomery Wards - for instance).

I don't know if I am making my point clear enough - other than to say that it
feels like these "companies" only exist - or were created - as "get rich
schemes" for their creators and owners - not because those involved are really
in it to make a "real difference" in the world (whether that would be a good
or bad thing is debatable).

I guess I miss seeing purpose and organic growth, and a valuation in line with
that, and heads or owners of such companies in it for a reason other than
"getting rich and getting out".

------
znpy
> 10 B$

> low

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finkin1
I know the feeling around WeWork's IPO is to poo all over it, but let's take a
step back and remember that all valuations at this point at just reports. It
was _reported_ that WeWork was going after 20B-30B, now it's _reported_
they're going after 10B. When articles cite "sources" I'm pretty skeptical.
Like all other IPOs, the bankers are going to price the stock based on what
they think the market will buy. There's always intangibles that are difficult
to evaluate, and maybe WeWork's IPO has more of those intangibles than usual,
but I don't think we're outside of the realm of normalcy. Well, maybe we are
in a massive tech bubble. I guess time will tell.

~~~
john_moscow
Those reports are used to gauge the public opinion. You "leak" that the
valuation is going to be $XYZ and then watch the public comments, news reports
et al to estimate how willing will the public be to buy in at this price.

~~~
JMTQp8lwXL
Do you do a follow-up Twitter sentiment analysis, or do you really only care
about the banker's commentary? Anyone on here, or CNBC, or Cramer's show is
just the peanut gallery. We aren't the market makers.

