WeWork Valuation!

Dear Reader,


The startup office rental company WeWork is about to debut on public stock markets with an Initial Public Offering.

What is actually WeWork worth?

WeWork realized 1.8 billion USD in revenues and made a net loss of 1.9 billion in 2018. According to media reports WeWork should price its IPO somewhere at 20 billion USD valuation. What is WeWork's intrinsic valuation?

I think WeWork is worth around 12 billion USD in the next 1 year. Simply, the loss of 1.9 billion USD is too big. Furthermore, there are corporate governance problems like the company paying millions to its founder and employing his wife and another family member. The upside for WeWork is that its revenue more than doubled from 886 mln. USD in 2017 to 1.8 billion USD in 2019. Actually, if WeWork continues growing so fast I am not so pessimistic as some analysts who say the company is worth 0(zero). If you scale a company fast enough there comes a time when revenue just exceeds costs at a breakeven point and after that the company becomes a money printing machine.

If WeWork continues to grow revenue with let's say 30% a year in the next three years, I think WeWork's valuation could easily reach 25 billions USD in 3 years time, if it improves its operating margin.


Here, I would like to make a note on valuations. Valuations are not static. At one point in time a company is worth something, at another point of time a whole different sum of money. Actions of governments on competition, regulation could dramatically alter the value of companies overnight. Human action could do the same.


So valuations are dynamic and depend on numerous ever-changing factors.

Disclaimer: The blogposts and comments on this blog and posts on social networks(Twitter, LinkedIn etc.) are not investment recommendation, are provided solely for informational purposes, and do not constitute an offer or solicitation to buy or sell any securities. The opinions expressed in the blogpost and posts on social networks(Twitter, LinkedIn etc.) are the author's and they in no way express the opinion or official position of the company where I am working currently!

Petar Vladimirov Posledovich is not liable for any investment losses incurred by reading and interpreting blogposts on this blog and posts on social networks.

Conflicts of interest: I may possess some of the securities, currencies or their derivatives mentioned in the blogpost and posts on social networks(Twitter, LinkedIn etc.)!

Respectfully yours,

Petar Posledovich