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WeWork says will file to withdraw IPO

reuters.com

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Re: WeWork says will file to withdraw IPO

#131

Post by bcrosby95 »

chii wrote: post #29
roland35 wrote: post #10

Wow what a huge rise and fall in the past few weeks! What I don't understand is how the S-1 filing ever saw the light of day? How could nobody reviewing that see any of the red flags that were obvious? I think this just shows how hard it is to be objective when there are so many cultural/financial/etc influences affecting your judgement. Obviously their team bought the hype (and as a sad Browns fan I can totally symp…

> Obviously their team bought the hype or nobody wanted to rock the boat. If you had pointed out this as a legal grunt or rank & file finance guy, you would have looked bad for "ruining" the exec's payday. Better to let the market decide and just keep your head down and receive your pay check.

Especially if it turned out the market loved it. Then you're truly screwed. When you're working for a regular paycheck, better to be optimistic and wrong than pessimistic and wrong.

Re: WeWork says will file to withdraw IPO

#132

Post by bryanmgreen »

S_A_P wrote: post #19

What I don't understand is how do things get this far down the road before a good old fashioned sanity check happens? I have got to think that Soft Bank knew/knows the valuation was off. The fact that they pushed on means they either intended to try and get away with it/take the money and run as I cant believe incompetence is the reason here. How did this get so far along??? As for Adam N, I have to think some part o…

Not even just with companies so ridiculous like WeWork, but also ones that lose profit and hundreds of millions of cash exclusively due to bad business models.

Re: WeWork says will file to withdraw IPO

#134

Post by notyourday »

ac29 wrote: post #100
akulkarni wrote: post #77

Earlier quoted context omitted.

This is a classic "bottoms-up" model that is quite viable (eg Dropbox, Slack, Zoom, Elastic, MongoDB). Not sure why anyone would call it a scam. In fact, I would be wary of software companies without a base of free users, as that means the company needs to keep spending a lot of its revenue on sales and marketing.

> Dropbox, slack Are these good examples, though? Dropbox is down ~35% since IPOing, and Slack is down almost 50%. This certainly suggests the market thinks they were both overvalued when they IPO'd.

I think you are confusing the opening price with an IPO price.

Slack went public at $26, it is at $23.50 today. It is less than 10% less than the IPO price.

Re: WeWork says will file to withdraw IPO

#135

Post by xkcd-sucks »

Hongwei wrote: post #38
harryh wrote: post #23

Earlier quoted context omitted.

In order for something to be fraud there has to be deception. This was never the case with WeWork.

I think the shenanigans they were pulling (crazy governance, conflicts of interest enriching the founder and wife, bad acquisitions) were obvious to the HN and analyst community, but possibly they hoped it would be over the heads of retail investors. Now obviously, in this case, it was too blatant and stunk bad enough that even retail investors shied away.

Most of the ethical red flags seem to be identical to municipal government corruption, e.g. enriching family members and giving contracts to companies one owns. It's been going on for hundreds of years, you'd think retail investors would be wise at this point

Re: WeWork says will file to withdraw IPO

#136

Post by skinnymuch »

prostoalex wrote: post #113
S_A_P wrote: post #19

What I don't understand is how do things get this far down the road before a good old fashioned sanity check happens? I have got to think that Soft Bank knew/knows the valuation was off. The fact that they pushed on means they either intended to try and get away with it/take the money and run as I cant believe incompetence is the reason here. How did this get so far along??? As for Adam N, I have to think some part o…

> I have got to think that Soft Bank knew/knows the valuation was off. For private rounds valuation is part of the equation, but liquidation preferences and ratchets are likely more important. As the famous finance saying goes "You set the price - I set the terms, you set the terms - I set the price". SoftBank has negotiated downside protection. Everything from there is just gravy on top. The press never seems to dis…

What major downside or any protections does SoftBank have with WeWork right now? Is there anything they are getting now or likely to get that doesn’t still have them $7B or so down the hole for WeWork?

The major thing is usually first dibs if the company sells for a lot less than the later valuations. In this case that doesn’t seem likely to happen with Softbank getting back most of their investment

Re: WeWork says will file to withdraw IPO

#137

Post by yowlingcat »

JohnJamesRambo wrote: post #43
S_A_P wrote: post #19

What I don't understand is how do things get this far down the road before a good old fashioned sanity check happens? I have got to think that Soft Bank knew/knows the valuation was off. The fact that they pushed on means they either intended to try and get away with it/take the money and run as I cant believe incompetence is the reason here. How did this get so far along??? As for Adam N, I have to think some part o…

“There are three ways to make a living in this business: be first, be smarter, or cheat.“ -Margin Call SV ran out of the first two because they are much harder. We are left with the dying gasps of companies trying the third way.

This is a great comment and a great point, but I'm not sure I fully agree with your conclusion. There are still plenty of great companies that are doing the first two, but there certainly is no shortage of the third way. What would be fascinating to me is to categorize, oh, the top N (where N is 5000 or so) of private, growth tech companies that have taken significant recent rounds of VC financing and see how the investment volume skews along these three categories.

Re: WeWork says will file to withdraw IPO

#138

Post by ethbro »

benj111 wrote: post #121
ethbro wrote: post #115

Earlier quoted context omitted.

The irony is that essentially all of SoftBank's playbook is ripped from Buffett. Except Buffett did it with non-tech, capital-heavy companies. Where it arguably works a lot more reliably.

"SoftBank's playbook is ripped from Buffett" How so?

Buffett's hypothesis (as I understand it) boiled down to (1) find successful businesses that are capital-starved, (2) pair them with businesses which naturally generate float (e.g. insurance), under a corporate umbrella, (3) invest the float in those businesses and thereby beat market returns (by only selecting quality businesses, and having the ability to provide mentorship / experienced leadership).

Re: WeWork says will file to withdraw IPO

#139

Post by notyourday »

goatinaboat wrote: post #102
notyourday wrote: post #22

So this is what I do not understand: they burn through money like crazy. For them IPO was not a path to liquidity for stock holders, rather it was a way to do the next raise. The large market basically said "Nah, can't get that money on those terms. Sorry". Their only private source of funding is Softbank. How are they going to raise more money for opex? Go back to Softbank and get another pile of cash at even higher…

WeWork’s plan was to raise at least $4Bn from IPO which would unlock $6Bn in bank loans, before the end of the year. Now they have a $10Bn hole in their budget which coincidentally is almost exactly the same size as SoftBank’s investment in them. They are in a lot of trouble if SoftBank doesn’t double down, and do it soon. Q4 starts tomorrow! And $10Bn may be more than the entire company is worth!

Which brings a question - could it be that this entire thing was Softbank's play to control the entire company?

$6B to get the seat at the table.

$10B now as a down around for a wipe out?

Re: WeWork says will file to withdraw IPO

#140

Post by vkou »

JumpCrisscross wrote: post #68
ixtli wrote: post #12

I feel bad for the stary-eyed kids one year out of college that are going to get mass fired. They're all really young and naive :/

> They're all really young and naive And now they'll be a little less of each. The lessons they can learn from this experience could put them ahead of the pack. We have an entire generation that knows nothing but post-crisis bull markets. When the next downturn comes, those tempered by bad experiences have the opportunity to position defensively and react nimbly. (Or at least more defensively and nimbler than their p…

Could you define: "Position yourself defensively and react nimbly" means to an IC?
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