SoftBank to take control of WeWork: Sources • Hacker News Board

Re: SoftBank to take control of WeWork: Sources

#101

Post by nostrademons » Tue, Oct 22, 2019, 1:15 AM UTC

kiba wrote: post #100

hilbertseries wrote: post #70

Earlier quoted context omitted.

I highly doubt going to Mars is the reason space x is still private. Given that astronauts have shown somewhat serious issues after being in space for six months, it’s unlikely the human body could survive three years in zero gravity without serious damage. Which means that a space flight to Mars would also require some form of artificial gravity and so for our lifetimes, is likely going to remain science fiction. No…

I don't think you understand space and space technology well enough to evaluate SpaceX if you think there's no way to 'generate' gravity in space without using space magic gravity generation.

Or physics - how to generate artificial gravity on an accelerating spaceship is literally an intro physics homework question.

Re: SoftBank to take control of WeWork: Sources

#102

Post by kelnos » Tue, Oct 22, 2019, 1:19 AM UTC

The thing that's ironic is that the IPO market likely would have valued WeWork at $10B, maybe even $15B, but since that was so much lower than the $47B valuation it had during SoftBank's earlier investment, they balked and walked.

SoftBank likely would have made out better in the near term had they just let the (disappointing, to them) IPO play out. WeWork would have launched with at least a $10B market cap (though of course that could have dropped on day one), would have raised a couple billion, and maybe would have even raised enough to meet the requirements for the loans they were planning on taking out. But now they've more or less gutted the company, killing anything that was even slightly interesting, turning it more or less into a bog-standard office real estate company. Which presumably will be able to turn a profit after a bit of retooling, but it hardly qualifies as "Vision Fund" material.

This is definitely just Son and SoftBank trying to save face.

Re: SoftBank to take control of WeWork: Sources

#103

Post by chii » Tue, Oct 22, 2019, 1:19 AM UTC

carty76ers wrote: post #63

ratww wrote: post #55

Earlier quoted context omitted.

To grow faster and disrupt the market. For a while it was more than a simple commission: it was 100% of the revenue for a whole year. They were also offering one-year free rent to new customers. Source: https://outline.com/yCcgS5

That has to be the most ridiculous thing I’ve ever heard, since Enron paid their employees bonuses for unprofitable deals.

we'll take a loss on each sale, and make up for it in volume!

Re: SoftBank to take control of WeWork: Sources

#104

Post by rgbrenner » Tue, Oct 22, 2019, 1:23 AM UTC

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.

His entire net worth can be accounted for with Softbank's investment of $20m in Alibaba in 1999. That's now worth ~$110B... and he has a 21% stake in softbank.

Remove that.. and he's at 0 or even negative. Is that luck or skill?

Re: SoftBank to take control of WeWork: Sources

#105

Post by yashap » Tue, Oct 22, 2019, 1:25 AM UTC

I can actually see this working out. Comparing the first half of 2018 to the first half of 2019, WeWork roughly doubled revenue while keeping losses constant. Their losses went from ~2x revenue to ~1x revenue, which is still nuts, but improving quickly. They also had $1.5 billion in revenue through 2 quarters, and are growing at roughly 100% year over year.

If SoftBank can really reign in spending, in 2 years we could be looking at a company that’s cashflow neutral, growing very quickly, with annual revenue in the range of $5-10 billion. From the outside looking in, this seems possible to me, and would result in a company with a valuation much higher than $8 billion.

Re: SoftBank to take control of WeWork: Sources

#106

Post by 55555 » Tue, Oct 22, 2019, 1:27 AM UTC

rmm wrote: post #74

how on earth does a company go from getting ready to IPO to being cash-strapped and needing an infusion in such a short space of time? Never saw the numbers in the prospectus, but surely there was some indication?

It's crazy that it's not basically fraud to do what they did. They put out a 100-200 page document saying "Our business is great" so that retail investors could make an informed investment decision and then 2 months later are like "actually it's relatively worthless and we have no money left and if we can't raise money right now, we will die". Did the people involved really believe that glowing 100+ page report? The difference between this and a pump and dump is simply intent, and I think it's most likely that the intent was there.

Re: SoftBank to take control of WeWork: Sources

#107

Post by hilbertseries » Tue, Oct 22, 2019, 1:28 AM UTC

nostrademons wrote: post #101

kiba wrote: post #100

Earlier quoted context omitted.

I don't think you understand space and space technology well enough to evaluate SpaceX if you think there's no way to 'generate' gravity in space without using space magic gravity generation.

Or physics - how to generate artificial gravity on an accelerating spaceship is literally an intro physics homework question.

We've currently never built a manned space ship for month long travels in outer space. We've never built a space ship that uses centrifugal force to simulate gravity and done longitudinal studies to verify that this doesn't have an adverse impact on Humans. SpaceX is has a market capitalization of 33.3 Billion. SpaceX which was founded 17 years ago has never had a manned flight. SpaceX has also never had a flight leave the atmosphere so far. But yes, it's entirely believable that they will go to Mars in our lifetime.

Re: SoftBank to take control of WeWork: Sources

#108

Post by sicromoft » Tue, Oct 22, 2019, 1:32 AM UTC

H8crilA wrote: post #92

crazygringo wrote: post #88

Earlier quoted context omitted.

Does WeWork ever need to IPO? If it turns WeWork profitable by cutting costs and implementing responsible leadership, it just keeps its share of all future profits. SoftBank wouldn't be doing this if it didn't think those profits were likely to be more than total investment so far. In other words, WeWork got acquired instead of IPO-ing.

The future profits only need to be higher than the $5B plus whatever they can get today from liquidating their existing holding. Sunk cost fallacy, or "what is done is done".

Don't forget opportunity cost. The future profits need to be higher than the $5B plus liquidation value, PLUS the expected value of another investment at the margin.

Re: SoftBank to take control of WeWork: Sources

#109

Post by H8crilA » Tue, Oct 22, 2019, 1:40 AM UTC

sicromoft wrote: post #108

H8crilA wrote: post #92

Earlier quoted context omitted.

The future profits only need to be higher than the $5B plus whatever they can get today from liquidating their existing holding. Sunk cost fallacy, or "what is done is done".

Don't forget opportunity cost. The future profits need to be higher than the $5B plus liquidation value, PLUS the expected value of another investment at the margin.

Oh yeah you can use the yield curve to discount future flows, and then demand something extra on top of that (Graham's margin of safety).

Re: SoftBank to take control of WeWork: Sources

#110

Post by perl4ever » Tue, Oct 22, 2019, 1:53 AM UTC

Traster wrote: post #12

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 in…

What I read is that $5B is on top of their past investments of roughly $11B.