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The We Company S-1

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Re: The We Company S-1

#331

Post by dctoedt »

rdslw wrote: post #328
dctoedt wrote: post #183

Earlier quoted context omitted.

This is also true. Back when I was drafting my then-company's Form 10-K annual reports, for just that reason I loaded up the risk section with a list of all the things that could go wrong, based on studying similar lists from the big software companies. It's sometimes known as vaccination or inoculation — "hey, we told you all these things that could make our stock price go south!" (The danger with this approach, of…

Your actions are reason, why this (yours incl) sections are useless from investor perspective. Take for example a risk from We Work company S1: > the sustainability of our rapid growth and our ability to manage our growth effectively; translation: getting older may cause you die. in other words: dont put your cat to microwave, and beware as your tea might be hot in your cup.

It's all about the incentives.

Re: The We Company S-1

#332

Post by dang »

situational87 wrote: post #286
mmillin wrote: post #2

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 almost as if the IPO market has become a ponzi scheme.

Maybe so, but please don't post unsubstantive comments to HN.

Re: The We Company S-1

#333

Post by danieltillett »

santiagogo wrote: post #300
danieltillett wrote: post #32

Earlier quoted context omitted.

I would say those landlords are going to be in for an even bigger shock.

I know one landlord who rented several buildings to them and he understands the risks perfectly, but says the price per sq/ft he's getting paid is so good that even if they blow up within 3 years it's still a great deal.

Curious to know what the landlords think of Wework’s prospects. Does he think they are going to blow up soon?

Re: The We Company S-1

#334

Post by epiphanitus »

dctoedt wrote: post #139
beager wrote: post #50

I’m really disgusted by how much recent tech IPOs inject pitch deck-style garbage into the S-1 filing, especially this one. I’ve always had a great amount of respect for the mediating nature of the S-1’s dry, candid, and ruthlessly honest assessment of business risks, and even though those things are still there, they’re blown out by marketing photos, full-page charts, and branding. This is basically like putting per…

WeWork's litigation counsel might have wanted the pitch-deck stuff to go into the S-1 to make the information more understandable to non-business people. That way, the pitch deck would be an official part of the record; in turn, this would mean a couple of things: 1. If disgruntled investors were to sue WeWork, the pitch-deck material could be referred to by WeWork's counsel in tactical maneuvering such as a motion f…

Should we just interpret these filings as CYA measures, or do they show the company preparing for an ugly legal battle with investors? Is it possible to tell the difference?

Re: The We Company S-1

#337

Post by staticautomatic »

dctoedt wrote: post #324
staticautomatic wrote: post #308

Earlier quoted context omitted.

As a jury consultant who's worked on a lot of securities and M&A-gone-wrong litigation, I don't understand why you think it would be beneficial for pitch deck stuff to go into a disclosure. If I were a defendant accused of making misrepresentations, I'd most likely want the pitch deck kept out. "Pitch deck stuff" is aspirational, to put it charitably. A defendant would ideally want to take the opposite position-- tha…

> As a jury consultant who's worked on a lot of securities and M&A-gone-wrong litigation Plaintiff- or defense side? > If I were a defendant accused of making misrepresentations, I'd most likely want the pitch deck kept out. That's never gonna happen (keeping it out), so good defense counsel will grasp the nettle and get out in front of the issue. Also (something I didn't mention before but should have): There's a ju…

> Plaintiff- or defense side?

On the whole I do more defense work, but plenty of both. For securities, more often defense. For M&A gone wrong, more often plaintiff.

I take your point about getting out ahead of the issue, but I'm not convinced that it's as powerful an argument as you think it would be, and I think it introduces other risks. Since you're familiar with IP litigation, you're no doubt aware that patents get invalidated by juries all the time in trials where plaintiff counsel makes that argument.

Re: The We Company S-1

#338

Post by raywu »

wpietri wrote: post #152
nabnob wrote: post #132

Earlier quoted context omitted.

It's a property company that's planning tracking everything people do in their buildings. >WeWork's latest acquisition is a small software company with 24 employees. Euclid is a spatial analytics platform...Euclid's website says the company is "focused on redefining the workplace experience of the future." Translation: optimizing every aspect of the physical workplace so workers are their most productive. Euclid does…

Yeah, I don't see that providing the outsized gains they're hoping for. I've talked to a number of entrepreneurs who business plan is basically 1. Collect data 2. ??? 3. Profit And every time I quiz them on point 2, they get squirrely. They can never explain exactly how it works; at best I get hazy references to Google making lots from data, which is at best a partial truth. In this case, I doubt having that data wil…

Always great to run into your comment on HN

Re: The We Company S-1

#339

Post by vadym909 »

nabnob wrote: post #132
doppp wrote: post #33

Earlier quoted context omitted.

It's not a tech company, it's a property company with the valuation of a tech company.

It's a property company that's planning tracking everything people do in their buildings. >WeWork's latest acquisition is a small software company with 24 employees. Euclid is a spatial analytics platform...Euclid's website says the company is "focused on redefining the workplace experience of the future." Translation: optimizing every aspect of the physical workplace so workers are their most productive. Euclid does…

Sure- and if they report which employees attend meetings and who spend more time at the water cooler, their rent and valuation will go up. That is some serious stretching of possible ways to make money

Re: The We Company S-1

#340

Post by speedracer »

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.…

Extremely levered indeed. I imagine that they will reduce the lease terms from the current average of 15 years when occupancy rates tighten. At that point they have a different problem, their margin difference between their lease payments and their lease revenue (minus the perks, furnishing office spaces) will come down. All said and done, had they been valued at say ~$10B, this would have been still a high risk play but at least the multiple is not so exorbitant. I don't get what Masa saw in this to value them at $47B, there must be something. Isn't he super smart???
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