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SoftBank to take control of WeWork: Sources

cnbc.com

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Re: SoftBank to take control of WeWork: Sources

#11

Post by newfangle »

mdorazio wrote: post #2

Better article in [1]. From the unconfirmed report: - SoftBank to invest $4-5 billion - Pre-money valuation at $7.5-8 billion - SoftBank will end the deal with ~70% control of WeWork - SoftBank's Marcelo Claure to take over as chairman of We - No confirmed word on additional job cuts, asset sales, or clawbacks from Neumann [1] https://www.cnbc.com/2019/10/21/softbank-to-take-control-of-...

4 to 5 billion investment in a company with an 8 billion dollar valuation.

At some point you have to wonder when its better to cut your losses and scrap the entire thing.

Re: SoftBank to take control of WeWork: Sources

#12

Post by Traster »

It's very difficult to see how SoftBank breaks even on this new deal. They're investing $5bn now, with the hope that it's worth more than that when they IPO, but several things have killed that idea. Firstly, their brand is tarnished. Secondly, the growth play will be gone by the time they IPO. Thirdly, the charismatic leader is gone, so the message of "Disrupting" and "We're a tech play' is gone. They've put $5bn into a company that's roughly the same size as a public company that's got a $4Bn market cap, but only got 70% equity as a result.

I think I'm at the point where I think that Softbank is throwing billions into wework to save face. That is a very bad move.

Re: SoftBank to take control of WeWork: Sources

#14

Post by natrik »

threeseed wrote: post #9
neural_thing wrote: post #3

This is your annual reminder that Masa Son once lost $70B

And is now worth $23B. So I would assume he knows a little about business.

I'd argue that assumption, [correlation of: current net worth -> knowledge about business], is flawed logically.

Re: SoftBank to take control of WeWork: Sources

#15

Post by thedudeabides5 »

newfangle wrote: post #11
mdorazio wrote: post #2

Better article in [1]. From the unconfirmed report: - SoftBank to invest $4-5 billion - Pre-money valuation at $7.5-8 billion - SoftBank will end the deal with ~70% control of WeWork - SoftBank's Marcelo Claure to take over as chairman of We - No confirmed word on additional job cuts, asset sales, or clawbacks from Neumann [1] https://www.cnbc.com/2019/10/21/softbank-to-take-control-of-...

4 to 5 billion investment in a company with an 8 billion dollar valuation. At some point you have to wonder when its better to cut your losses and scrap the entire thing.

I mean, if you liked 20% ownership at 50bn, you prob love 70% ownership at $8bn.

This is where the value of all that liquidation preference kicks in. At some point it becomes in SoftBanks interest to push for lower valuation, as it means they get to wipe out all the people that came before.

Re: SoftBank to take control of WeWork: Sources

#16

Post by OnlineGladiator »

thedudeabides5 wrote: post #15
newfangle wrote: post #11

Earlier quoted context omitted.

4 to 5 billion investment in a company with an 8 billion dollar valuation. At some point you have to wonder when its better to cut your losses and scrap the entire thing.

I mean, if you liked 20% ownership at 50bn, you prob love 70% ownership at $8bn. This is where the value of all that liquidation preference kicks in. At some point it becomes in SoftBanks interest to push for lower valuation, as it means they get to wipe out all the people that came before.

They can also wipe out themselves by throwing good money after bad.

Re: SoftBank to take control of WeWork: Sources

#18

Post by threeseed »

newfangle wrote: post #11
mdorazio wrote: post #2

Better article in [1]. From the unconfirmed report: - SoftBank to invest $4-5 billion - Pre-money valuation at $7.5-8 billion - SoftBank will end the deal with ~70% control of WeWork - SoftBank's Marcelo Claure to take over as chairman of We - No confirmed word on additional job cuts, asset sales, or clawbacks from Neumann [1] https://www.cnbc.com/2019/10/21/softbank-to-take-control-of-...

4 to 5 billion investment in a company with an 8 billion dollar valuation. At some point you have to wonder when its better to cut your losses and scrap the entire thing.

WeWork is the dominant player as the overwhelming trend in business is towards flexible and remote working.

If even a small percentage of companies adopt the Gitlab model, WeWork is going to be extremely successful. And given Softbank's business model is designed for long term, strategic bets there is no way I would be cutting losses just yet.

Re: SoftBank to take control of WeWork: Sources

#19

Post by tempsy »

qeternity wrote: post #7
lasgsf wrote: post #5

Does this mean then all the common are wiped out due to the liq preference that existed before?

Essentially yes. Not wiped out per se, but underwater. If they can grow the business beyond the high water mark, then there’s a shot at getting paid. But I’d say in a best case that’s unlikely.

No it doesn’t. Read the deal. SoftBank will buy up to $3B in stock from existing shareholders, including employees.

They are bailing out employees and investors. People will at least get something.

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