WeWork Stock 2019 – Should I buy Wework Shares?
Can I buy WeWork stock?
Driven by a global co-working market that now has more than 7,000 vendors, WeWork has risen to the top of leveraging the new “sharing economy” and is now one of the most watched “unicorn” IPOs, and many people have begun to ask, ‘how do I buy WeWork stock?’.
Here’s what you need to know about a leader in the “We Generation” of community startups.
Company Overview of WeWork
WeWork was founded in 2010 by husband-wife duo Adam Neumann, Rebekah Paltrow Neumann, and their partner Miguel McKelvey out of New York. WeWork provides its online network of members with access to shared office space by renting out space from landlords, transforming the leased office into well-designed workspaces, and subsequently subletting that space to its customers. It is now home to more than 40,000 members in 23 cities across the globe.
WeWork earns revenues through subscriptions that start at $45/month and allow access to events, benefits, and its digital app. For $400/month, its offers a dedicated desk, printing capabilities, and additional benefits such as phone booths, conference rooms, mail, and package handling. Their main offering has successfully attracted customers that range from companies, small businesses, startups, entrepreneurs, and freelancers.
WeWork has recently diversified into a new offering: WeLive. WeLive also relies on the “sharing economy” for residential real estate and is expected to work by similar principles, but with homes. It connects tenants with living areas where there will be shared kitchens and bathrooms.
WeWork is a private company and does not explicitly disclose its financials. However, leaked documents in 2016 revealed that it was forecasting revenues of $532 million in 2016 with $14 million in adjusted earnings. It forecast a negative free cash flow of $385 million for the year. Analysts estimate that its WeLive segment will account for nearly 18% of its revenues by 2018.
WeWork is venture funded and has raised $3.7 billion in ten rounds from investors like SoftBank, Hony Capial, Fidelity Investments, Benchmark Capital, Goldman Sachs, Harvard Management, and J.P. Morgan Chase. WeWork recently held its latest round of funding in February 2017 and raised $3 billion from SoftBank at an undisclosed valuation. An earlier round in October 2016 valued the company at $16 billion, up from $10 billion in March 2016. Following its most recent round of funding, the company could be worth up to $20 billion.
WeWork is not the only company thriving off of the rental space in the sharing economy. San Francisco’s RocketSpace lets landlords build out office spaces and then charges a fee from the landlord for running operations. Other market competition includes LiquidSpace, PivotDesk, and ShareDesk. According to Colliers International, there are now more than 160 players in the co-working space who run more than 350 operational centres across tier-1 and tier-2 cities in the U.S.
When will an IPO happen?
Analysts expect that WeWork will file to go public in 2017, but the timing of the offering has not yet been disclosed. Unlike other CEOs of other highly valued startups, Adam Neumann is not scared to take his company public. He’s made it clear that he is very aware of his duty to pay back his investors as stated on the stage of Fortune’s Brainstorm Tech conference in Aspen, Colorado in July 2016.
Neumann and his co-founder and wife, Rebekah, had several failed startups before WeWork and stated that, “One thing we’re not afraid of is going public.” They have not, however, given a time frame for the offering.
What is unique about WeWork?
At $17-20 billion USD. WeWork would be the fourth-largest, soon-to-be publicly traded office landlords. Boston Properties (BXP) leads with a $22 billion USD market capitalization. Uniquely, CEO Neumann, has made It clear that they don’t classify their company as a tech company, real estate company, or a services company. WeWork is likely to continue to do well due to its market positioning as a “community company”. WeWork places a huge emphasis on its mission and culture, which is increasingly valued by the millennial demographic.
When asked if WeWork’s evaluation is inflated, the founders disagreed, arguing that they project to grow by thriving off a shift in humanity, unhindered by business cycles or investor’s speculations.
WeWork has been at the forefront of capitalizing on a larger movement—the “We Generation” of the sharing, on-demand economy that now includes a growing number of freelance professionals. According to a recent survey by the Freelancers Union, freelance workers now comprise 35% of the U.S. workforce.
What are the risks of WeWork?
WeWork is at risk of being stuck in a costly situation if demand for co-working space were to sharply decree, since the company rents out long-term leases to its members. Some analysts argue that WeWork is at risk of enduring the same burden as office sharing companies HQ and Regus did during the dotcom bubble. Both HQ and Regus filed for chapter 11 bankruptcies.
WeWork has proved surprisingly resilient, however, showing real growth through the real estate bubble burst of the late 2000’s. WeWork has also deliberately diversified its offerings with supplemental service offerings such as WeLive.
Other worries include those of a larger tech bubble, since WeWork attracts many venture-backed startups. If another economic crisis were to occur or funds dried up in the tech space, WeWork may lose a majority of its main customer base.
WeWork Stock: Conclusion
Most investors and analysts are confident about WeWork and its prospective IPO. Its mission, culture, business model, timing, leadership, and growth all show promising signs of a successful public offering that any keen investor should watch closely.