I Working, You Working, WeWorking

I don't have a position right now nor have I ever had one, but it is safe to conclude that WeWork is a solid buy right now. This is a birds' eye view of the company, but I doubt the broader thesis here changes.  

1. Share price is ~51% down since going public in Oct'20, it's currently at $4.84 and since the lowest it can go is obviously 0, downside is reasonably protected, as you're buying it at a cheap discount / good value...maybe they have to raise equity again in the very foreseeable future (given historical levels of cash burn), but the following note was penned taking atleast a 24-36 month time view       

2. I spent some time at a few different WeWorks the summer of 2018 in Chicago, and felt back then, that there was a lot they could get away with. For instance, serving beer in the office was an unnecessary expense to incur, and so were arranging events with the goal of bringing the "community" together (not only in my experience were these events thinly attended, but also noise pollution for those, who were actually trying to get stuff done). Obviously, these are anecdotes that I am relaying here, but the broader point here is that in a way the PR crises that WeWork faced has been good for the company, and I think they will emerge with a better balance sheet and more streamlined operating model (more below)  

3. WeWork's focus on location / expense rationalization as well as willingness to extract more from landlords ("net capex") for improvements is, I think, reflected in its improving operating cash flow. If WeWork needs to amend/cancel the lease, they should have reasonable negotiating leverage with the landlord to not get fucked over, because given this ecommerce boom (and consequently the need for logistics / warehouse operations to be closer to the end-customer in order to minimize delivery and waiting times), an astute landlord should have options. WeWork's locations, based on my limited experience in Chicago (2018) and Toronto (2022), tend to be located in decently quality areas with good enough foot traffic and nearby amenities. Where it does own properties and wants to sell to rationalize, there should not be a shortage of buyers.   

4. I personally don't like working in shared spaces, but I do think that most people do enjoy them, and this is a model that is here to stay. Since WeWork has a first-mover advantage, is protected by VERY high barriers to entry, and its name is synonymous with office share, this will bode well for the company. Plus, WeWork should be a good alternative for companies looking to rationalize their real estate foot print post this pandemic / epidemic   

5. Biggest upsides to the model though are the expected ramp-ups in the physical occupancy rates, and the growing % of Enterprise Members, who are less price-sensitive and locked in for a longer tenor. Physical occupancy currently around the ~50/60% and back in 2018 was around 80. Focus on Enterprise Members is also showing: % of members, who are enterprise (companies with > 500 employees), was 38 and 42% in 2018, and 2019 respectively. It currently is ~47% and though less than where it was in Dec 2020 (52%), pandemic played a role here... 

6. Lastly, and this is not something that I say lightly, that the company already screwed up once in 2019, which led to all kinds of PR crises for its biggest shareholder (Softbank) and others. They should not screw this again. A lot on the line, and so I expect nuts and bolts to tighten as well as better/sound corporate governance to prevail going fwd 

At a share price of $4.84, the market is just not factoring these things i.e. not giving them enough credit for their growth prospects. I am not a WeWork scout here, and so not trying to act like a telemarketer here, but if you're not constraint by investment time horizon, this is definitely a buy for the next 2/3 years if not more.