Making matters worse, the company currently uses an extremely high discount rate of 8.2% to calculate the present value of its operating leases on its balance sheet. See the math behind this dynamic DCF scenario. The company also burns tons of cash, carries huge risk factors in a recession, and sports some of the worst corporate governance practices Iâve ever seen. [100] In terms of investments, during the $32 million series B of a women's only co-working space, The Wing, WeWork contributed a portion of the fund. Even if WeWork achieves the same margins but grows revenue by 20% compounded annually instead of 30%, the company is worth just $12.6 billion today, a 73% downside to the current private market valuation. [13], In May 2008, Israeli-born Adam Neumann and American-born Miguel McKelvey established GreenDesk, an "eco-friendly coworking space" in Brooklyn. P/E Ratio N/A. Figure 4: WE vs. BXP: Actual and Market-Implied NOPAT. [31] In September 2017, WeWork expanded into Southeast Asia via the acquisition of Singapore-based SpaceMob, and it set aside a budget of $500 million to grow in Southeast Asia. That’s 7% of the company’s entire cap table that will be payable only if WeWork's valuation as a public company is at and then above the $47B figure sometime in the next ten years. [32] The firm's top competitor in China is Ucommune, which was[when?] What raises more red flags for WeWorkâs IPO is Neumannâs significant history of personally profiting off his position in ways that raise significant conflict of interest concerns, including: The companyâs dual-class share structure means public investors will have no recourse to stop the self-dealing and personal profiteering that has marked Neumannâs tenure as CEO to date. The deal values it at $9 billion, less than a quarter of its 2019 valuation", "All the unusual investments WeWork's cofounder Adam Neumann has made, from a medical marijuana provider to a wave pool maker", "WeWork snaps up coding bootcamp Flatiron School", "WeWork buys Meetup to bring people together outside of work", "WeWork Wades Into Enterprise Software by Buying Conductor", "Conductor execs buy their company back from WeWork", "WeWork just acquired a Chicago design school", "WeWork Acquires Office Management Software Team, Teem", "WeWork was a family affair, until things got complicated", "Acquisition Autopsy: Details—and Questions—Behind MissionU's $4M Sale to WeWork - EdSurge News", "WeWork Acquires Managed by Q, Seeking to Expand Beyond Office Leases", "WeWork Continues Consolidation Spree with Acquisition of Spacious", "Wework Is Acquiring China's naked Hub for 400 million", "Why WeWork Just Invested In This Women-Only Club", "WeWork is opening gyms in its office spaces", "The most valuable startup in New York City just opened its first gym to compete with Equinox see what it's like inside", "WeWork. The company has only itself to blame. It had considered investing as much as $16 billion but downsized plans as it dealt with turbulence in financial markets and opposition from investment partners. Itâs much more likely that when a recession hits, WeWork will collapse under the weight of its massive operating lease obligations, which increased from $34 billion to $47 billion in just the first six months of 2019. In fact, Neumann seems to be using the companyâs IPO as another way to profit. [81] In early March 2020, WeWork announced the selection of Kimberly Ross, the former CFO of Baker Hughes and Avon, as the chief financial officer. [103] As of January 2020, it also hosts fitness classes and offers personal training sessions. If the company cannot deliver positive cash flows now, when will it? [108], In September 2019, it was announced that Rebekah Neumann would step down as CEO of WeGrow and will relinquish her role in WeCompany. The Journal of Financial Economics reveals: 1. 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