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It's not a tech company, it's a property company with the valuation of a tech company.
Is it? I was under the impression it does not own land for the most part.
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Is this how these things are usually calculated? Does a watch manufacturer say that there are approximately 255 million left arms which we can reach by post, and since our watches sell for $1000 that's a $255B opportunity?
> Is this how these things are usually calculated? Yes, it’s a run-of-the-mill back-of-the-envelope TAM [1] estimate. The point of this number isn’t to value the company. It’s to identify obvious limits to scaling. [1] https://en.m.wikipedia.org/wiki/Total_addressable_market
In my experience, it's more likely in order to show an enormous number as a way of telling investors, the executives you need to approve your product/project, etc. that your thing has just incredible potential.
It has some value. If the TAM isn't very big and you'd have to achieve 50% of it to ever turn a profit, that may be a red flag. But TAMs that lead to business projections like: "We only need to put our watch on 10% of the left arms in the world to make a huge pile of cash!" are pretty bogus.
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Profitability and the value of the equity aren't necessarily related, though. Amazon was unprofitable for many years, but its stock still increased in value.
Thats because Amazon was only unprofitable due to Capex and R&D. Their operating margin is fantastic, it was this promise that enticed investors! WeWork on the other hand is very ugly.
According to the prospectus, they lose so much money because they are building out new locations. Their break even point takes about a year for an individual location. So theoretically, they have a path to profitability. I just wonder where they get the cash in the meantime. >$1B/year burn rate, ouch.
They're raising up to $6B in a debt offering.
The mechanics of deferred rent are fascinating here. They have 2.8 billion of deferred rent on their balance sheet. See note 11 and 17
My favorite part of new tech company filings is looking at the risk section and finding something to the effect of: "We are not profitable, and may never be." > We have a history of losses and, especially if we continue to grow at an accelerated rate, we may be unable to achieve profitability at a company level (as determined in accordance with GAAP) for the foreseeable future. I understand the reasoning behind havin…
It's not a tech company, it's a property company with the valuation of a tech company.
> We have approximately 1,000 engineers, product designers and machine learning scientists that are dedicated to building, integrating and automating the complex systems we use to operate our business
Earlier quoted context omitted.
Is it? I was under the impression it does not own land for the most part.
It's a mix. Some locations they own, some they lease--including some that the CEO owns and they lease from him, which is an interesting arrangement.
The mechanics of deferred rent are fascinating here. They have 2.8 billion of deferred rent on their balance sheet. See note 11 and 17