We work's losses more than doubled last year to about $1.9 billion, even as its total revenue also doubled to about $1.8 billion.
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They’ve taken almost as much money as Maddoff. All landlords will be screwed.
From @cashpoorcapital on Instagram https://www.instagram.com/p/BwUmgcrjd8D/
Amazing marketers/fund raisers that prove VCs are sheep most of the time.
If there's a richer sheep it works
Softbank got cash for days. They wont let it fail or we will also see the Middle East go down with it. They haven't even decided to start raising capital on Vision Fund 2 with MBS getting looked at.
This. "Venchur Capitul" really has become real estate flipping for Patagonia wearing, kale smoothie drinking, 6 AM jogging meatheads. Actually, this is unsurprising given the low yield environment we're in. Institutionals have to park their megabucks somewhere. And oh hey VC is pretty hot right now, right? Asset allocation, baby.
Anybody here heard of "Community Adjusted EBITDA"?
I believe it strips out corporate overhead.
Funniest / saddest Finance concept I've ever come across
When I first read the article I thought it was a joke/parody site.
I’m of the view that we are in the midst of both a VC/PE and a RE bubble.
Hard for me to feel wrong about either looking at WeWork.
Airbnb is the only one of these ipos I think look interesting.
Lyft/Uber lack any kind of moat in an autonomous vehicle world. There’s going to be 10 apps that fiercely compete on price.
WeWork - I would love to see a great write up on them and how they can have margins not seen in the real estate game. I guess for commercial real estate maybe they can minimize loss to lease and price more like apartments? But I don’t see the huge valuation creation.
Airbnb though I think might have something sustainable. In many ways it’s like Uber/lyft. Big difference is an Uber/lyft app competitor you spend 20 min in the car and is repeat business. For a week long house rental brand name I think can matter more and they have a chance to maintain margins.
Sometimes you have great new ideas that sound amazing. Then you look out 20 years and the idea was realized by the competitors never gained any margins. Think about airplane investing in the ‘50s. Would have looked very sexy. Then they basically lost money non-stop for 60 years. You need something in a business that limits competitions. Fb had it because you could only have a couple social networks that everyone would be on. No one is going to use 20 networks so was a market that would find a winner.
A lot of these IPOs to me just feels like industries that will have a ton of companies and no margins. Ride-sharing doesn’t feel like a winner take all market to me or WeWorks current shared-work space model. If there’s 20 players in a market no one gets huge profits.
Like I said I’m open minded Airbnb might be the exception,
airbnb only appeals to younger and poorer crowd
And that is a massive market globally. Even massive might be an understatement.
Not true at all. I’ve stayed in $5k a night Airbnb (festivals like Coachella) and have rented out $1k a night Miami Beach condo. They are definitely in the high end.
I’d argue it’s actually more useful at the high end as rich people often have luxury properties that are often vacant and conversely a lot of people want to rent unique places instead of hotels.
Lol what a ridiculous comment.
Do hotel only cater to younger and poorer customers? That's a silly generalization because different hotel products cater to different customers. Just like AirBnB has shared bedrooms and entire multimillion dollar villas on a mountain or beach you can rent out.
Also, some random joe named Sam Walton became one of the richest people on earth but selling stuff to lower income folks.
Ride-hailing feels kind of like a scammy roll up situation right now, yes?
Long term, I think it boils down to a duopoly, with Tesla owning the high-end Apple like experience and Google owning the low-end.
The most talented people I know at Uber all shifted to the Eats side of the business, so maybe they can put together a monopoly in an adjacent market...
That said, I think long term Amazon owns the stuff delivering space.
Lots of smart people (Bill Gates, Peter Thiel, etc.) think AirBnB is the exception.
When I'm staying some place longer than a week, I'll pick an AirBnB over a hotel (I've personally used AirBnB to book places for 2-3 months at a time when moving to a new city), and I know quite a few people that use the service to rent out spare bedrooms or residential property they're not using.
There is also lots of cool experiential shit you can find on AirBnB (i.e. renting a compound in the Costa Rican jungle with some friends for 2 weeks) that really isn't available elsewhere.
I still like the service high end hotels provide, and I don't see how AirBnB replaces that without changing their model.
Maybe AirBnB ends up as the ultimate middleman, sitting between residential owners and renters globally?
While I am rooting for Airbnb due to uniqueness of their listings (who doesn't want to rent a villa or treehouse), I am not nearly as bullish as you are around them for two main reasons: increasing competition from traditional players (Booking, Expedia and as of last week Google) and professionalization of the platform. Part of the uniqueness that very much developed Airbnb's brand is eroding while commercial players take over the platform. I'd much rather support the "mom & pop" outfit as if I wanted to support the commercial company I'd use my points at Hilton.
I've been telling people for almost two years that WeWork is a textbook ponzi scheme. Free rent periods are burning off, and they have no cash flow to cover the surging debt service.
Good. I hope they fail, and all the other coworking spaces as well. RE needs to see more people lose their shirt, and more often. It bothers me to no end that half the developers in NYC are fucking morons building high priced condos, not hitting their numbers, working out their debt with a bank, and not losing a penny because they syndicate out all their equity. And then waiting 12 months and doing it again, because lenders and investors don't seem to give a shit about track record any more.
Put some of these idiots on the street; let the failures fail for real, and we'll see pricing and the industry as a whole come back to earth. That goes for WeWork and every idiot who plowed money in, or every idiot who tried to crib the same idea under a re-branded name.
Agree 100%. Worth noting that luxury condo margins are incredible tho, so there is incentive to gamble on the projects. If the project doesn’t fail, everyone involved is flush with cash and newly emboldened to start more of them.
All this ridiculous mixed-use development is a fee grab. The pension/sovereign wealth funds are stupid enough to pay sub 6% cap-rates for it as if it were investment grade credit...
Profitability is meaningless, while revenue is king. Sad times.
Well said. Sad indeed.
And then there is “community-adjusted Ebitda,” which excludes those expenses — as well marketing, administrative and other costs of growing the business. By that measure, WeWork earned $467.1 million last year, double what it earned in 2017.
What the hell is this? On what planet does this even make sense, for anyone to report on and/or any self respecting person think is a viable measure. It's not even the fact that everyone can make up whatever measures they want, but that someone thought it was even worth thinking this way - that's what terrifies me. Even if the intention is not to be a viable measure - what the fuck is that!?
I understand adjusting things, eliminating accounting shit that hits you, etc. I get it. But this type of shit just makes me so angry on so many levels.
Class B and oversupplied office markets are already getting whacked this cycle even with the huge artificial demand coming from the coworkers - it will be interesting to see what happens if/when that dries up. Tenant's demand for top quality space has created a huge gap in rates between the "class A" buildings and older class-b in all of the markets I cover. WeWork (and their competitors) have been paying decent rates for (generally) class b/less desirable spaces (albeit with large concessions). If wework goes away, I think that these large concessions will continue, but the higher rates they are paying will not.
Anyone look at WeWorks overall occupancy? I heard it's in the low 80% range.
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