WeWork?
Is it just me or is this firm moving and at a rapid pace which in my opinion may not end well..they are only 7 years running and in that time they have went from their core business of office coworking, to building a fund, elementary school and now are possibly going into retail and hospitality? The latter all within the past like two years..
Not sure what's driving your analysis that it may not "end well". Maybe from RE bubble standpoint, which I know little about that market. But, I would suggest the industry is going up right now. Recently, WeWork led a series B in $32MM financing to help a similar startup and competitor, The Wing, expand with more locations. They desperately need it, seems like because they have thousands on a waiting list, with 1500 members already, and they're willing to pay up to $3K a year. The consumer demand is there for more locations, so right now all signs are pretty positive for WeWork.
It's a massively saturated market. In Denver there is a co-working space more or less on every other block. I can think of at least 6 brands which all have multiple locations.
The new verticals they are chasing seem to be a reach from their core model, and fundamentally, they are a real estate company that is valued like a tech company. Their model is way too capital intensive and not scalable enough to replicate long term tech company margins.
great article from about a month ago in WSJ about this
https://www.wsj.com/articles/wework-a-20-billion-startup-fueled-by-sili…
if this IPOs, Imma short it
They are effectively a cooler version of Regus, never been sure why they are valued with a tech-like multiple. Easy short for me.
I agree that I have no idea what they are doing. Seems like they are rapidly expanding into only tangentially connected fields. Their corporate business model makes no sense to me. I have zero idea if that will end well or not, but it seems to me that their focus should be on perfecting the shared office space model since the model is barely profitable; however, this may be why they are expanding into seemingly other industries because their investors realize that shared office space has limited upside potential.
All one has to do is look at what happened to regus. During the tech boom in the late 90's/early 2000's, they were trading at upwards of $350ish/share in late 2000. By Q4 2001, they were down to $20/share. Why would wework be any different during a downturn? Do people really think that because they have "cooler" buildouts that they are better positioned? I'd also be pissed if i was an investor and they went and put money into wavepools simply because the CEO is an avid surfer. Its bananas.
Anecdotally, if you've been in any of the buildings they occupy, it's a little spooky. There are fairly substantial blocks of space that are not filled.
From a more technical perspective, I just don't feel good about buying buildings with these guys in it, because this is the type of thing to go first in a down economy - boutique, collaborative office space where the often 'tiny' subletting tenants could probably operate just as well from home. Secondly, there have been a few articles I've read where larger companies are now shaking the 'work remotely' concept and are now trying to consolidate/bring people back into offices for productivity. If that's the case, this business plan won't hold up since no company is going to want to lease a ton of space from them at one time when they could just go to the landlord direct for much lower rent. But there are definitely some contrarian firms that are buying these properties up like crazy.
The entire tech culture is nauseating. I hope the whole thing crashes.