Runaway Story to Meltdown in Motion: The Unraveling of the WeWork IPO

[@joaocarneiro6683]

Thank you professor for your time and insights. This is the closest I can get to NYU education. Greetings from Brazil!

[@lolzpenguins]

Love the videos, thanks. Saw you on CNBC and it made me search you out. Glad I’m subscribed, very high quality content. Thanks for sharing sir.

[@dikshanttahilramani1789]

Your clarity of thought and ability to explain valuation is absolutely outstanding!

[@briancrane7634]

We are always excited when you have new thoughts Professor...thank you! Fascinating analysis!

[@RadheVajrakaya]

so r u investing in We work or not.

[@VamosGamingSys]

These videos are precious insight into the professor’s genius mind. Love them!

[@تومريتشاردز]

Well, he did take the time to read the prospectus and news.

[@danielheckel2755]

The growth assumption was way too high: much of the market is already in multi-year leases with competitors, VC-style growth is hard to finance with public money (and SoftBank has its limits), and the decade-long bull market would need to turn into a multi-decade bull market. Appreciate the Professor's courage to go public with a number at a time the IPO is slipping away, and his excellent reminder of the ingredients for Runaway Stories untethered from reality.

[@nilaydas7558]

Agreed Daniel, the growth assumed by Prof is perhaps the best possible and he did so that hardly anyone can argue on that rate. Prof has been generous, as a close wTher of this industry, I feel the valuation won't even worth 5 to 6B.

[@gouravmahapatra423]

Seriously who would downvote this sane voice in the jungle of madness!

[@learnallican3627]

This is so much better than all the rost on comedy central. 😂

[@maddysydney]

Sir. You open eyes of the public to the nature of the business macro to micro, so the sheep we are don’t just look at it as a stock to flip. Many thanks from Australia

[@YallahYah]

That one dislike is from the WeWork CEO.

[@thewolfandthefox]

Hahahahahahahahaha for sure!!!

[@ramjiYahoo]

Thanks a lot, professor, it helps us to follow deep insight on corporate governance, CEO's arrogance, BOD's arrogance, succession plans while valuing even small unlisted companies

[@LaMayimba90210]

I was anxiously awaiting your take on this company. Thank you!

[@varunkryadav]

Watching this post phase 1 aftermath. Great Video, superb analysis and the best part is even after being biased. The conclusion is unbiased! The reality still remains, delusions of grandeur rule the world, while the voice of reason is the first to be ignored.

[@AshwiniRajPandey]

Thanks for this prof. Can we have a insight on OYO's story of softbank funding when they have massive negative cash flows?

[@AnotherDante]

Great insight as always. I was wondering, what do you think about the GE accusations? Will you do a video on it?

[@aasthabisht3431]

Good day sir! Here with another small doubt. In forecasting operating margin for the first 6 years and how it will converge to the industry average 12.5% rate, you have used the formula 12.5- (12.5 - 2019's margin)/6 x no. of years left. Here I don't understand the idea behind subtracting 12.5 with the weighted difference between it and last year's margin (precisely, (12.5 - 2019's margin)). Can you please elaborate on that? P.S. The excel model you have attached is extremely thorough and enriched my understanding and wonder for the subject. Thank you so much, again.

[@cranklesnacks]

Great analysis, thank you. Great idea, financed by cheap money / low interest rates, story stock with storytelling ceo, increasing losses on increasing revenue.. I probably don’t have to say the name it reminds me of, but I will TESLA :)

[@reezvi394]

I really want to see the transcript of WeWork's pitch to Softbank!

[@sau002]

Excellent analysis. Please do a similar one on Peloton

[@MrFrankReynolds]

thank your for your analysis. i think the analysis was done very objectively and anyone can decide how much growth and margins they think is plausible. personally i would not invest in this ipo because of the ceo and his behaviour and because i think the business model is flawed

[@arpangoyal1092]

Sir, nice analysis but any particular reason why in slide20 data table at 80% revenue growth & 15% EBITDA margin, the equity value is "negative" 97,620 ?? At this scenario, equity value should be positive and the highest as per my understanding. Am i missing anything?

[@ffesat]

Arpan Goyal nice observation. I believe negative part is a typo as all other negative equity values are painted red while this one is green.

[@FiebreDeOro]

Great presentation Professor Damodaran! I think the investors, specially SoftBank is betting on using WeWork as a channel to sell more products and services from their portfolio of investment companies. Yes, the company is loosing money currently however it reminds me of Google's initial investment in acquiring a huge number of servers to provide free email and search engine capabilities. The next step for Google was to monetize via ads given that the company already knew what you liked and what you were searching for. Likewise, WeWork has acquired a great number of locations too rapidly at a point when real estate prices are going up. Now, as you mentioned the current valuation is being driven by emotion, and I agree that it's very high. However, at an $8 Billion I'd also be compelled to invest in this company. Even better, I'd wait until recession hits the streets. Because ultimately this is a great concept which will generate a great return on a long term basis. Just to clarify, I'm not invested in the WeWork, We, or any of its affiliates.

[@shravanvenkataraman2194]

Hello Mr. Aswath, the audio has a lot of bass - can you reduce the bass a bit so that the audio can be clearer?

[@banzhidiaomn]

always insightful. Professor.

[@aasthabisht3431]

Thank you so much for the analysis sir! I plan to use this for my valuation assignment in class. A small doubt. At 13:41 where did you get the figures for the lease rentals?

[@AswathDamodaranonValuation]

The prospectus.

[@ericcartmansh]

Fantastic as usual. To the point facts :)

[@michaell4235]

Masayoshi Son talks about WeWork as a data company, that they'll be able to leverage data on their tenant startups and their employees. While that's difficult to value, it should have been mentioned in the valuation. Great video as always though.

[@seeker4430]

If may make a suggestion.... Please increase the volume of the sound... Perhaps preamplify

[@extremepsyche3135]

Great analysis!

[@johanneszwilling]

1:13 Loved that one!

[@monsieurdiecasts3393]

Kombucha on tap! made me spit my coffee, LMAO!!

[@Blazetoamaze]

This is so good, thanks very much!

[@hallbjornkarlsson5726]

This is nothing short of great stuff.

[@brianthrom6858]

I wonder how much damage this pricing fiasco will have on WeWorks customer base. A large part of the appeal of having a desk at WeWork is the fact that it was a startup that people wanted to emulate. Now that their dirty laundry is strewn about, I doubt they’ll be as attractive to new and existing customers

[@killshotmessy]

Love your videos professor, hope all is well.

[@wilderramirez1302]

Why in your table (23.57) with 80% of growth and 15% of operating margin value of equity is negative 97620? is it a typo?

[@charles-antoineberube2830]

Look at the 5% margin there's something strange too....

[@nndlchModi]

Great video!

[@xyd1231]

Prof how about if Wework or similar type of startup start find a way to make creative recurring revenue?. Maybe they can monopolize office supplies for the tenants, or take percentages from office workers lunch uber-eats order, or Starbucks coffee order, or provide outsource consulting maybe in legal advice or marketing etc. Maybe they can create some amazonprime-like subscriptions for aspiring single entrepreneur that have future purchase power but with some additional benefits, maybe a bundle of wework(work), spotify/netflix(leisure), and peloton(lifestyle). Then from this bundle consumption they can create a holistic big data that they can leverage for future possible revenue

[@lovelove1431000]

Thank you for posting your Review.

[@sngs9565]

There are too many start ups that does not innovate, yet, raises a lot of cash and look to cash out during IPO.. Mind boggling to see many of these companies listed goes for IPO while not posting profits....

[@RadheVajrakaya]

is it a gud company.

[@user-lz2mt5nc9e]

Thanks a lot Prof. Damodaran. Your view on cannabis stocks would be highly appreciated as well, it seems like a good buying opportunity at this time.

[@SinisaStojanovic]

Thank you, professor!

[@nautical1078]

CEO is using company money to buy his own other business/products, I'm not sure why this company is so hyped.

[@pureumkim5154]

Wework is a real estate company with lot of growth for now...any mismatch or recession will kill this company. It may be a good short as soon as it lists-

[@jeremyruiz5032]

Thanks for your analysis professor! Hope you're doing well :)

[@RadheVajrakaya]

did u invest in wewrork.

[@jeremyruiz5032]

@@RadheVajrakaya nah, i'm just a retail investor.

[@keithouyang]

Thank you Prof..! =)

[@dorisjiang3009]

thanks for your insights！

[@manishsat]

Excellent !!

[@RadheVajrakaya]

Well Thank You for the Talk.

[@mazinibraheem2383]

thanks for your time doctor

[@princeataya4167]

Right on point as always

[@nothing-wp9ti]

This is institutional scale gambling. If it works out, it will work out tremendously.

[@sws5899]

I wonder if Adam Neuman and his wife Rebekkah will take the time to listen to this....perhaps it will help them understand what they are paying the professionals for in their family office....

[@ackt83]

if wework actually ipo few months ago people will buy into it. just a matter of timing

[@bh1935]

This is great

[@my-financial-wealthblog4423]

Another loss making Unicorn company goes public.If company is loss making for almost a decade it means that investors will plea for IPO. WeWork office opened in 2010, in 2019 there’s 528 locations in 111 cities across 29 countries.Only 30% of locations are mature (opened more than 24 months ago & reached stable cash flow).Another 70% of locations are non-mature(opened les than 24 months ago & not yet cash flow stable). For year ended on December 31, 2018 company released next financial results: 1)Revenue $1.8 billion. 2)Total expenses $3.5 billion. 3)Loss from operations $1.7 billion. 4)Net loss $1.9 billion. For 6 months ended on June 30, 2019 company published next financial results: 1)Revenue $1.5 billion. 2)Total expenses $2.9 billion. 3)Loss from operations $1.3 billion. 4)Net loss $904 million. The We Company experienced rapid growth which could be risky if not managed properly.Also expected increase in capital expenditures and operating expenses.In non-U.S. jurisdictions WeWork entered into joint ventures (ChinaCo,JapanCo,PacificCo region)with agreement which insure exclusive and preemptive rights for local partners. myfinancialwealthcom.wordpress.com/2019/08/25/shared-workspace-business-by-wework/?preview=true

[@christopherwilcox9654]

Buy puts?

[@xxxs8309]

I except shorts piling up on this one once it IPOs

[@eXoticon]

Expect, you mean?

[@xxxs8309]

@@eXoticon yeah sorry

[@vikas_atri]

Thanks 🇮🇳

[@pranavshrestha4953]

I can somewhat figure out the ambitions of large PE like Softbank pouring money into to startups like WeWork but what I don't get is the interest of other investors like JP Morgan, T Rowe Price, Wellington Management, Goldman Sachs. They have very smart people working for them, they must have known that WeWork is BS. Why take such a risky bet?

[@cadddie_ai]

Most of high finance is a conformist shit show,

[@cadddie_ai]

@Teringventje 😂

[@danielheckel2755]

At least for Goldman Sachs, it might be to curry management's favor and get fat IPO fees. Plus, I am not sure if the funds are Goldman Sachs principal or managed fund, or a special purpose vehicle specific to let GS customers interested in We to buy into it.

[@pranavshrestha4953]

@@danielheckel2755 Nice insight. But upon doing that Goldman Sachs is putting their name to dirt. They should at least stick their bets in companies such as Uber, though they are losing money like crazy, they are still looked upon positively.

[@danielheckel2755]

@@pranavshrestha4953 Indeed, this will definitely harm their reputation. The risk they took on the company didn't pay off.

[@kudancer]

Never liked the company , first red flag - the first business the founders started was prototype we work , bought out by their first landlord. UX/UI real estate development = no barriers to entry. Listen to the npr episode of How I Started This on the WeWork company

[@TheeChozzenOne]

Sooner or later you’re gonna get eatin 😂

[@TheInvestmentCircle]

We work? More like we worth... nothing.

[@jimothyus]

sooo weworks is basically a poorly done mcdonalds that sells office space and community instead of burgers?

[@habibbialikafe339]

Ok boomer

[@luizcastro5246]

You are using text in the least efficient way possible. I have to pause to read the text, but it doesn't have enough information to be self-explanatory, but I can't just listen to the audio either because I would miss all the technical detail in the process. In summary i hate it.

[@mats7457]

Thank you , professor !