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WeWork Bonds Drop Below Par for First Time Since IPO Filing

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Re: WeWork Bonds Drop Below Par for First Time Since IPO Filing

#11

Post by rb808 »

duxup wrote: post #4

It just seems like WeWork took an existing business model of renting office space, went all VC and gathered a bunch of money and sky high evaluation (toss in some creepy insider dealing) ... and ... that's it. I know there were some theories on cornering the market, or getting some sort of huge buy in / contracts with companies hiring remote workers but for the most part there's plenty of office space (at least in my…

I think the established office owners were astonished at the high valuations in an otherwise boring industry. I remember this article from a few months ago. https://www.reuters.com/article/us-usa-property-wework-value...

It also mentions the big problem with We, than in the next downturn the revenue will likely stop and it'll be in trouble.

Re: WeWork Bonds Drop Below Par for First Time Since IPO Filing

#12

Post by whatshisface »

code4tee wrote: post #8

This IPO story is struggling. There have been several recent examples of public confidence in the business model collapsing post IPO, but the WSJ and others are reporting on this so heavily as it looks like we’re now seeing public confidence starting to fall apart before the IPO of an ultra-unicorn. Get your popcorn ready. Someone might buy these bonds at their deflated prices because WeWork still needs to pay intere…

There isn't an institution in the world that could sell an IOU $100 for $100, not even the US Treasury. For example, if you bought a 1-year dated IOU for $100 from the US Treasury today, it would cost only $98.30.

Edit: this comment was written in response to the parent before it was edited to remove any trace of what was being replied to.

Re: WeWork Bonds Drop Below Par for First Time Since IPO Filing

#13

Post by duxup »

linuxftw wrote: post #9
duxup wrote: post #4

It just seems like WeWork took an existing business model of renting office space, went all VC and gathered a bunch of money and sky high evaluation (toss in some creepy insider dealing) ... and ... that's it. I know there were some theories on cornering the market, or getting some sort of huge buy in / contracts with companies hiring remote workers but for the most part there's plenty of office space (at least in my…

> I wonder what other folks selling office space in the market think about all this? If I owned a bunch of office space, I'd be exiting now (or would have already exited). I think it's probably like the bitcoin effect: bitcoin got notorious, so all the other coins went up too. IMO, uncoordinated pump and dump.

That or maybe round up some traditional investors to prep for swooping up some good buys after the dust settles?

Re: WeWork Bonds Drop Below Par for First Time Since IPO Filing

#14

Post by chadash »

duxup wrote: post #4

It just seems like WeWork took an existing business model of renting office space, went all VC and gathered a bunch of money and sky high evaluation (toss in some creepy insider dealing) ... and ... that's it. I know there were some theories on cornering the market, or getting some sort of huge buy in / contracts with companies hiring remote workers but for the most part there's plenty of office space (at least in my…

> It just seems like WeWork took an existing business model of renting office space, went all VC and gathered a bunch of money and sky high evaluation (toss in some creepy insider dealing) ... and ... that's it.

That is basically what they did, but they also marketed it really well and made the process seamless. Everyone points to Regus as an example of a company that already existed in WeWork's space, but as far as I can tell, most people have only heard of Regus because WeWork is so often compared to them.

Before WeWork, most people weren't aware that coworking spaces were an option. Startups would work out of homes or they would find cheap office space and sign long term leases for spaces they might soon outgrow. WeWork solved these issues for them.

Now, I don't think there's much of a competitive moat. I don't think there's much stopping companies from moving to any other co-working space. Their corporate governance issues are crazy. They are probably overvalued (at least as of their last raise in the private markets). But they certainly are the 900 pound gorilla in this space and the space has gotten much bigger as a result of them.

Re: WeWork Bonds Drop Below Par for First Time Since IPO Filing

#15

Post by chadash »

whatshisface wrote: post #12
code4tee wrote: post #8

This IPO story is struggling. There have been several recent examples of public confidence in the business model collapsing post IPO, but the WSJ and others are reporting on this so heavily as it looks like we’re now seeing public confidence starting to fall apart before the IPO of an ultra-unicorn. Get your popcorn ready. Someone might buy these bonds at their deflated prices because WeWork still needs to pay intere…

There isn't an institution in the world that could sell an IOU $100 for $100, not even the US Treasury. For example, if you bought a 1-year dated IOU for $100 from the US Treasury today, it would cost only $98.30. Edit: this comment was written in response to the parent before it was edited to remove any trace of what was being replied to.

German bond yields are currently negative. That means that you pay them more than $100 for every $100 you get back.

See https://www.bloomberg.com/markets/rates-bonds/government-bon...

Re: WeWork Bonds Drop Below Par for First Time Since IPO Filing

#16

Post by sephamorr »

whatshisface wrote: post #12
code4tee wrote: post #8

This IPO story is struggling. There have been several recent examples of public confidence in the business model collapsing post IPO, but the WSJ and others are reporting on this so heavily as it looks like we’re now seeing public confidence starting to fall apart before the IPO of an ultra-unicorn. Get your popcorn ready. Someone might buy these bonds at their deflated prices because WeWork still needs to pay intere…

There isn't an institution in the world that could sell an IOU $100 for $100, not even the US Treasury. For example, if you bought a 1-year dated IOU for $100 from the US Treasury today, it would cost only $98.30. Edit: this comment was written in response to the parent before it was edited to remove any trace of what was being replied to.

Plenty of sovereign debt interest rates are below zero, so you'd pay $101 for $100 in a year's time. Whether or not this is sane economic policy is a question though.

Re: WeWork Bonds Drop Below Par for First Time Since IPO Filing

#17

Post by mytailorisrich »

chadash wrote: post #14
duxup wrote: post #4

It just seems like WeWork took an existing business model of renting office space, went all VC and gathered a bunch of money and sky high evaluation (toss in some creepy insider dealing) ... and ... that's it. I know there were some theories on cornering the market, or getting some sort of huge buy in / contracts with companies hiring remote workers but for the most part there's plenty of office space (at least in my…

> It just seems like WeWork took an existing business model of renting office space, went all VC and gathered a bunch of money and sky high evaluation (toss in some creepy insider dealing) ... and ... that's it. That is basically what they did, but they also marketed it really well and made the process seamless. Everyone points to Regus as an example of a company that already existed in WeWork's space, but as far as…

There's marketing and there's targeted marketing. All the people who need the services Regus provides know about Regus.

Re: WeWork Bonds Drop Below Par for First Time Since IPO Filing

#18

Post by whatok »

code4tee wrote: post #8

This IPO story is struggling. There have been several recent examples of public confidence in the business model collapsing post IPO, but the WSJ and others are reporting on this so heavily as it looks like we’re now seeing public confidence starting to fall apart before the IPO of an ultra-unicorn. Get your popcorn ready. Someone might buy these bonds at their deflated prices because WeWork still needs to pay intere…

Quite likely is a vast overstatement. They're yielding a slight bit more than they did on issue.

Re: WeWork Bonds Drop Below Par for First Time Since IPO Filing

#19

Post by JackFr »

Hold on a minute there, Bloomberg!

These bonds were trading below par since they were issued, for well over a year. They briefly popped over par after the S-1 was filed. That is to say, the smart money has had these valued fairly for a while, and some fake smart chumps got in late.

Is WeWork a dumpster fire? Probably, but this headline makes it sound like the status quo ante is the end of the world.

Re: WeWork Bonds Drop Below Par for First Time Since IPO Filing

#20

Post by nradov »

chadash wrote: post #14
duxup wrote: post #4

It just seems like WeWork took an existing business model of renting office space, went all VC and gathered a bunch of money and sky high evaluation (toss in some creepy insider dealing) ... and ... that's it. I know there were some theories on cornering the market, or getting some sort of huge buy in / contracts with companies hiring remote workers but for the most part there's plenty of office space (at least in my…

> It just seems like WeWork took an existing business model of renting office space, went all VC and gathered a bunch of money and sky high evaluation (toss in some creepy insider dealing) ... and ... that's it. That is basically what they did, but they also marketed it really well and made the process seamless. Everyone points to Regus as an example of a company that already existed in WeWork's space, but as far as…

It probably depends on where you're located but co-working spaces have been a thing in Silicon Valley since at least the late 1990's (first Internet boom). Everyone in the tech industry knew about them.
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