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The We Company S-1

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Re: The We Company S-1

#271

Post by mdorazio »

sonofaplum wrote: post #267
short_sells_poo wrote: post #232

Earlier quoted context omitted.

Seems like they are pretty much levered to the hilt. What happens when the current bubble bursts (or even just deflates) and their occupancy rate declines? Their business model seems to be selling short term leases and buying long term leases. This is all fine and dandy as long as they can find enough buyers for the short term commitments, but the distribution of almost all such strategies tends to be heavily tailed.…

in a recession, is short term, flexible office space more or less desirable?

It's important to distinguish between the general form of leased small office space and the WeWork model. In a recession, I feel it's pretty likely companies would look at their expense numbers and decide that WeWork is way too expensive in comparison to options like Regis, work from home, or just eliminating workers outside the main office.

Re: The We Company S-1

#272

Post by Areading314 »

sonofaplum wrote: post #267
short_sells_poo wrote: post #232

Earlier quoted context omitted.

Seems like they are pretty much levered to the hilt. What happens when the current bubble bursts (or even just deflates) and their occupancy rate declines? Their business model seems to be selling short term leases and buying long term leases. This is all fine and dandy as long as they can find enough buyers for the short term commitments, but the distribution of almost all such strategies tends to be heavily tailed.…

in a recession, is short term, flexible office space more or less desirable?

Less. Small businesses die like flies in a recession

Re: The We Company S-1

#273

Post by qroshan »

hackerbabz wrote: post #36
phyalow wrote: post #20

Earlier quoted context omitted.

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.

This is what seems to not be understood by a lot of investors and people commenting on investments. Amazon could have turned a profit years earlier if they wanted to. Instead it made more sense to continue spending all of their money on expansion and R&D. It's the same with Tesla. They are selling a shit ton of cars at good markup. If they wanted a profit, they could have one. They just don't want one right now.

Huh? Clearly you are clueless about Tesla's financials.

Tesla's gross margin is a piddly 18%. They also need money to build and maintain service centers, super charger networks (all needed because Tesla doesn't have a dealer network or a gas network).

Then there is debt servicing, working capital, maintaining their plants, inflationary effects of labor wage (as their labor pool gain experience). All these are not discretionary R&D.

Tesla is fundamentally unprofitable and Musk suddenly has realized this and hence the major pivot to FSD (which is about 15 years away)

Re: The We Company S-1

#274

Post by gscott »

short_sells_poo wrote: post #232
gdgtfiend wrote: post #205

WeWork has $33.9 Billion in Non-canceable lease commitments, and it's lease payments are increasing 100% YoY. I think that is the true ticking time bomb for this company. In a world where billion dollar losses (Uber) seems somewhat normal, those lease obligations are still outrageous, and those payments will come due eventually, whether they have the money or not. In 2019 they attributed over $800 Million to operatin…

Seems like they are pretty much levered to the hilt. What happens when the current bubble bursts (or even just deflates) and their occupancy rate declines? Their business model seems to be selling short term leases and buying long term leases. This is all fine and dandy as long as they can find enough buyers for the short term commitments, but the distribution of almost all such strategies tends to be heavily tailed.…

> Seems like they are pretty much levered to the hilt. What happens when the current bubble bursts (or even just deflates) and their occupancy rate declines?

Convert the We Work spaces into homeless shelters = profit from Government contracts.

Re: The We Company S-1

#275

Post by nknealk »

fjp wrote: post #181
nknealk wrote: post #144

Earlier quoted context omitted.

Let me try to explain with an example. GAAP requires straight line depreciation of a lease. So if I gave you a 2 year lease on a facility and required a single payment of $1M at the end of the term, you'd account for that as 500K expense in year one, 500K in year 2. In year 1, your cash balance didn't change though right? I only wanted payment in year 2. So you record a 500K deferred rent liability to indicate that t…

Very clear explanation, thank you. It seems somewhat curious they don't have to reveal when they would be contractually obligated to pay out?

They are required to disclose it. See page f-59 at the top. You'll note that their lease payments are 1.3B this year but go up every year after.

Edit: the rate of increase is startling. They are going to have an additional 500M in leases on top of their expense this year plus another 200M come 2021 on top of that

Re: The We Company S-1

#276

Post by homonculus1 »

kart23 wrote: post #242
mdszy wrote: post #18

That wegrow bit seems really strange and cultish with all the mentioning of "connecting with the universe" and "cosmic education".

What the actual heck. Why are startups trying to do schools now? There is no way I'm sending my kid to a company with shareholders. Oh, and it costs $30,000 for your 4 year old to attend preschool. Why must we 'disrupt' anything and everything? https://wegrow.com/ https://wegrowparents.squarespace.com/

>Rebekah has traveled the world apprenticing and studying under many Master Students, such as His Holiness the Dalai Lama and Mother Nature herself, and is committed to creating an educational community that fosters growth in humans' minds, bodies, and souls elevating the collective consciousness of the world.

Sounds like a vanity project for the CEO's wife.

Re: The We Company S-1

#277

Post by glaive123 »

nknealk wrote: post #275
fjp wrote: post #181

Earlier quoted context omitted.

Very clear explanation, thank you. It seems somewhat curious they don't have to reveal when they would be contractually obligated to pay out?

They are required to disclose it. See page f-59 at the top. You'll note that their lease payments are 1.3B this year but go up every year after. Edit: the rate of increase is startling. They are going to have an additional 500M in leases on top of their expense this year plus another 200M come 2021 on top of that

Is the $500M in leases on top of their expenses assuming 0 growth? Or is their growth plan baked in?

Also, is the deferred rent liability fixed assuming 0 growth?

Re: The We Company S-1

#278

Post by WhompingWindows »

sonofaplum wrote: post #267
short_sells_poo wrote: post #232

Earlier quoted context omitted.

Seems like they are pretty much levered to the hilt. What happens when the current bubble bursts (or even just deflates) and their occupancy rate declines? Their business model seems to be selling short term leases and buying long term leases. This is all fine and dandy as long as they can find enough buyers for the short term commitments, but the distribution of almost all such strategies tends to be heavily tailed.…

in a recession, is short term, flexible office space more or less desirable?

Wouldn't anyone spending money on that just cheap out and go with a library or cafe or home-office to save money? Sure, not working at home is great for productivity for some people, but when push comes to shove, their customers can largely move elsewhere, right?

Re: The We Company S-1

#279

Post by vikramkr »

martin_bech wrote: post #200
nova22033 wrote: post #182

Earlier quoted context omitted.

FB opened at 38 and is now close to 200..so maybe not the best comparison. FB actually makes money.

But stille completely crazy, that you can buy up, most of the company, and Zuckerberg still controls it.

You know what you're buying. You're buying a share of the earnings/monetary value of the company, and are valuing it based on your belief in zuck as a leader. You are not buying any control in the company, and that's pruiced in. I'm sure shares would be worth more if zuck didn't control the company and you could gain control by buying shares.

Re: The We Company S-1

#280

Post by vikramkr »

40acres wrote: post #261

I have a very unsophisticated eye, but it's difficult to avoid the feeling that a portion of modern VC is a pump and dump scheme. Particularly when taking into account recent equity moves by WeWork and Beyond Meat.

Beyond at least seems like it's a company with a strong path to profitability during a major shift in the food market towards meat alternatives. IDK what wework is doing...
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