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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

#91

Post by milesskorpen »

crazygringo wrote: post #88
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…

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.

There needs to be some kind of exit, because at some point the Vision Fund needs to return money to investors - and that's a lot sooner than "run WeWork to earn back $5b+ via dividends" would take.

Re: SoftBank to take control of WeWork: Sources

#92

Post by H8crilA »

crazygringo wrote: post #88
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…

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".

Re: SoftBank to take control of WeWork: Sources

#93

Post by [deleted] »

xenospn wrote: post #67
anm89 wrote: post #53

Earlier quoted context omitted.

Simple, someone gave them money at that valuation (softbank). It doesn't mean the underlying value exists but it does give them that "valuation"

Obviously - but why did Softbank think it was worth so much more? They were an investor - they knew that the company was a financial black hole.

[deleted]

Re: SoftBank to take control of WeWork: Sources

#95

Post by tahdig »

xenospn wrote: post #67
anm89 wrote: post #53

Earlier quoted context omitted.

Simple, someone gave them money at that valuation (softbank). It doesn't mean the underlying value exists but it does give them that "valuation"

Obviously - but why did Softbank think it was worth so much more? They were an investor - they knew that the company was a financial black hole.

Probably to inflate the valuation, do a quick IPO of WeWork for 10x the actual value it should have, get their shares sold on high price, and wave to the fools that took the bait and bought an almost worthless stock.

This whole ordeal was the best that could happen for the normal people, basically fell into the hole they themselves dug, because the economists etc. called their bullshit out loud.

If you have not already, these are good reads from one of the critics of the whole scheme:

1. WeWTF - https://www.profgalloway.com/wewtf

2. WeWTF, Part Deux - https://www.profgalloway.com/wewtf-part-deux

Re: SoftBank to take control of WeWork: Sources

#96

Post by H8crilA »

bitflipr wrote: post #90

I guess Adam will get those margin calls on his $700m in loans on WeWork shares after all. Hope he can cover. https://www.ft.com/content/a9254a70-f1a8-11e9-bfa4-b25f11f42...

This saga will be a great read in a year or three. Hope someone writes a long article on this. Joining the great American predecessors of corporate failure like Enron or Lehman Brothers.

Re: SoftBank to take control of WeWork: Sources

#97

Post by philwelch »

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…

Rebranding can happen, and the “charismatic leader” was the #1 problem.

The bull case for WeWork that I always heard was based on the existence of a WeWork-shaped market opportunity, and WeWork themselves being in pole position to take it. The bear case was that WeWork was run by crazy people. I think SoftBank’s decisions here are making the best of a bad situation.

Re: SoftBank to take control of WeWork: Sources

#98

Post by ww520 »

Actually SoftBank is getting a good deal, using $5B to get a controlling interest of WeWork at 70%, wiping out all the commons and other LP's. If they can cut out the slacks and focus on the core value proposition, WeWork can work after 4 to 5 years. The WeWork brand is unique and valuable.

They did that to Priceline in the past. Priceline was almost dead at one point. Got sold at a fire sales. They hunkered down and executed, and look where they are now.

Re: SoftBank to take control of WeWork: Sources

#99

Post by philwelch »

milesskorpen wrote: post #91
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.

There needs to be some kind of exit, because at some point the Vision Fund needs to return money to investors - and that's a lot sooner than "run WeWork to earn back $5b+ via dividends" would take.

As soon as it’s been transformed into a profitable business, the exit is going to become an option.

Re: SoftBank to take control of WeWork: Sources

#100

Post by kiba »

hilbertseries wrote: post #70
nostrademons wrote: post #60

Earlier quoted context omitted.

> My limited understanding is they are avoiding an IPO because their financials are not up to snuff. My understanding is that they're avoiding an IPO because it would jeopardize SpaceX's mission of getting to Mars. When they're privately held, Musk can vet investors to be sure that they're aligned with SpaceX's mission, or ensure that they're powerless enough that they can't make problems if they're not (eg. no board…

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.
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