11–20 of 229 posts
If it, nonetheless, sells at this price, it seems that it will more or less prove that IPOs don't have much to do with the fundamentals.
Why would anybody claim it's a tech company? What kind of tech do they leverage to differentiate?
Personally I am bearish because I don't think they can hire the engineering talent to pull that off. They should've gone on a tech hiring spree long ago if that was their intention but I know of no prominent tech leaders who work there.
Why would anybody claim it's a tech company? What kind of tech do they leverage to differentiate?
Because a company calling itself "tech" and "sophisticated" automatically gets higher stock market valuation by unscrupulous investment analysts.
Thus, a company is priced higher the more techy and sophisticated is its image.
Have you heard of Chinese companies' price jumping just from them adding word "blockchain" or "o2o" to their name? This is what it is.
https://www.independent.co.uk/news/business/analysis-and-fea...
Though everybody runs to point fingers on "oriental mindset" of some fund managers, few notice that this happens in the West in a form that is even more extreme.
A perfect example of that is a company called Netflix. They sell videos over the internet, but they are priced a whole ∞ more than companies selling videos on physical tapes
It isn't right now, but if you buy at this valuation you're betting that they can diversify away from memberships as their main source of revenue to something more "techy." Personally I am bearish because I don't think they can hire the engineering talent to pull that off. They should've gone on a tech hiring spree long ago if that was their intention but I know of no prominent tech leaders who work there.
Very Interesting that the company that Supports Wework is in YC Summer batch [1] > Narrator: Narrator is a full-service data team for startups of any size. The team behind Narrator built WeWork’s data infrastructure, and wants to target more startups as early customers. The company says they’re generating $91,000 per month with this business model, but they aren’t stopping there. Narrator wants to build as a cross-co…
I like that WeWork is finally forcing us to have the conversation about WTF a "tech company" even is. A company that sells software? Or one that employs a lot of engineers? Or companies that use a lot of tech in their operations? Companies with a presence in San Francisco and Kombucha on tap? Are big banks tech companies? Insurance providers? Hospitals, auto manufacturers, oil and gas... What isn't a tech company?
It would seem that these days, Wall Street and private equity can agree that a "company that isn't growing" definitely isn't a tech company, even if it uses technology :)
I'm starting to think that WeWork may be an interesting experiment on the current state of the stock market. It's not just HBR; Bloomberg and virtually every other mainstream financial news analysis outlet has had an article explaining why WeWork is overvalued at its current IPO price. If it, nonetheless, sells at this price, it seems that it will more or less prove that IPOs don't have much to do with the fundamenta…
The way that those individuals arrived at that decision can either be through really technical analysis, or "I heard about it from my dog", or anywhere in between.
WeWork's business model is "borrow short, lend long." That is, they accept very short term promises to pay (month to month leases from customers), and aggregate them to make very long term promises to pay (mutli year leases from suppliers). Keep the spread.
This works as long as there are lots of customers who will pay a premium for short term flexibility. We can presume that will be somewhat cyclical, although in fairness they also probably have caught a secular trend toward remote / coworking / flexibility.
When the cycle turns down, those short termers are done but the long term promises to suppliers keep going ...
That also leaves aside the question of leases with escalators. I have heard a rumor that some WeWork locations have substantial out-year escalator clauses (meaning the rates they owe to suppliers sharply increase in future), meaning that even if customers stay on board, WeWork will face a need to raise prices substantially to meet its obligations.