WeWork IPO 🏢

Here’s the S-1 document - https://www.sec.gov/Archives/edgar/data/1533523/000119312519220499/d781982ds1.htm

& a couple of choice tweets from an FT journalist -

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can’t wait to have it ranked in our App :thinking:

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Additional interesting tweets

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I struggle to find any uniqueness except that they are creating an ecosystem in which all tenants interact and create network effects.

Being a Wework tenant ourselves before, we have not felt much of a network effect :thinking:

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WeWork’s just made a fairly small (given how much capital they have), acquisition of another co-working space provider.

That seems like a bit of a strange move, given that WeWork won’t be able to brand these shared spaces to make them ‘WeWork like’ and presumably, it’ll be harder to integrate these customers into their larger community :thinking:

But it’s much cheaper to rent office space via Spacious so maybe this is a good entry point for early stage startups, to draw them into the WeWork ecosystem, before they get big enough to move into a regular WeWork office?

An interesting write up about WeWork and the IPO which I was reading this morning.

I personally avoid day one IPOs, I prefer to let the market bed in their value than trying to work against the market. It does mean I might miss day one for the next big thing but that’s the risk I’m willing to take!

I’m excited to see where We Company will rank once they list. For me, I’ll be watching but not investing with this one!

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It looks like they’ve caved in to pressure -

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Apparently WeWork targeting a $20 - $30 billion valuation for their IPO, which falls quite a long way short of the $50 billion valuation that SoftBank gave them earlier in the year.

Bloomberg | Investing.com | TechCrunch

Investors often arrange preferential terms when they invest, for example SoftBank could have arranged Participating Liquidation Preferences as a condition of their investment, to make sure that they’d recoup their investment before other shareholders get a payout from the IPO. If they did then that could be bad news for employees because they’d only be able to divide up what’s left..

This kind of situation is also why CEOs arguably shouldn’t be allowed to take $700 million out of a company before it IPOs.

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Wow.

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Reuters version of the same article without the paywall.

Sanford C. Bernstein analyst Chris Lane said that if The We Company halts the IPO, SoftBank could come up with an alternative funding plan for the startup, which he estimates needs $9 billion in funding to become cash-flow positive.

The article comes from comments from inside SoftBank however, officially they have declined to comment on the rumours.

Who knows how true this is. The story sounds extremely believable, but you never know. In the end of the day if SoftBank is willing to wait longer, can’t they hold onto the shares either after the IPO? I haven’t looked into the rules of the SoftBank fund so I don’t know if that is possible.

The general message seems to be they want conditions to be better before the IPO having been burned on recently.

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Surely it’d be a disaster for WeWork if they have to cancel the IPO, just in terms of how difficult it would make going public again?

I’ve not seen this happen before so maybe I’m being overly pessimistic..

Edit

This pretty much sums up the situation for me -

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The only one who seems to gain from a delay is SoftBank, if the IPO is much lower than Softbank’s valuation when they invested.

Personally, I don’t get WeWork and can’t see how they can even justify a 20bn valuation. More than anything, they are crazily over leveraged property company with a lot of hype and not a lot of profit.

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Same here. Maybe this will be the first VC created bubble from this cycle that gets this big and then bursts before the company can even go public? It’s hard to imagine but cashflow is king and perhaps this will be a wake up call.

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Ok then.

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avoid using technology…

so he can stay inside his wework office then :man_facepalming:

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They haven’t given up yet then.

The group said on Friday that it would reduce Mr Neumann’s voting rights, from 20 to 10 times the power of an ordinary shareholder, and cancel the super votes in the event of his death.

Those don’t seem like big asks to be honest!

FT | Bloomberg

Surely not? :cold_sweat:

If this keeps going they might take the change I have down the back of the sofa

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Alphaville are speculating that the corporate governance changes are too little, too late and (I think) hinting that the CEO needs to go.

https://ftalphaville.ft.com/2019/09/13/1568385712000/WeWrite-down/

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but they’ve delayed it

According to The Guardian, if they don’t go public by the end of the year, they’ll have even more problems -

The company has been under pressure to push ahead with the flotation to secure funding for its operations. We Company secured a $6bn credit line from banks last month but can only access this if WeWork floats before the end of the year and raises at least $3bn.

Here’s City AM’s analysis of the situation -