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Why WeWork Is Considering An IPO Despite Losing $1.9B in 2018

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WeWork's parent company, The We Company, is set to go public this year. It's the latest in a string of richly valued start-ups considering an IPO in 2019. Even though The We Company was recently valued at $47 billion it’s hemorrhaging cash and lost $1.9 billion on $1.8 billion in revenue in 2018. Things improved for WeWork in the first quarter of 2019, but only slightly: The company says it lost $264 million on $728 million in revenue during the quarter. Its core business centers on renting out co-working spaces to everyone from startups and freelancers to large enterprises. WeWork says it’s in 485 locations and has 466,000 members, up from 186,000 in 2017. The We Company's CFO told CNBC that investors should look at WeWork’s losses as “investments” that will lead to more cash flow. However, Lyft and Uber’s recent IPO stumbles could bode poorly for WeWork’s chances of a successful debut, as investors seem wary about taking a bet on companies that lack clear paths to profitability. » Subscribe to CNBC: https://cnb.cx/SubscribeCNBC » Subscribe to CNBC TV: https://cnb.cx/SubscribeCNBCtelevision » Subscribe to CNBC Classic: https://cnb.cx/SubscribeCNBCclassic About CNBC: From 'Wall Street' to 'Main Street' to award winning original documentaries and Reality TV series, CNBC has you covered. Experience special sneak peeks of your favorite shows, exclusive video and more. Connect with CNBC News Online Get the latest news: https://www.cnbc.com/ Follow CNBC on LinkedIn: https://cnb.cx/LinkedInCNBC Follow CNBC News on Facebook: https://cnb.cx/LikeCNBC Follow CNBC News on Twitter: https://cnb.cx/FollowCNBC Follow CNBC News on Instagram: https://cnb.cx/InstagramCNBC #CNBC #WeWork Why WeWork Is Considering An IPO Despite Losing $1.9B in 2018
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Text Comments (767)
Ju (6 days ago)
First you grow big without being that
Matt (10 days ago)
Save us from this cheap propped up bubble pop coming
Andrew M (11 days ago)
The part where they opened their own “we” school was creepy.
Andrew M (11 days ago)
If I had any money I’d place a short on We Work. I’ll bet it’s completely out of business or either acquired and totally transformed in the next 5 years or so... more likely the former
twistedtheaos (12 days ago)
When the goal of every "tech" company is simply to become a monopoly.
Skyerzen (13 days ago)
I would love to rent a place at one of these wework places and show up with air compressors, power impact tools, welders, metal benders, lathes, a CNC and start fabricating parts for cars and motorcycles. :D you know, show these millennials what real work looks like.
necraduq (14 days ago)
If I wouldn't call an UBER tomorrow, UBER would still have to pay its software developers!
WL G (14 days ago)
Captain Picard (14 days ago)
More like We Going Out of Business am I right?
Damjan Djuric (15 days ago)
sounds like a bubble to me
Michael Wilder (15 days ago)
im shocked this video doesn't have more dislikes.. WeWon'tBuy
Bughatii (15 days ago)
We in 2019 Did they finally get their bailout ?
James Homes (15 days ago)
Hi can you tell me how to tell what a company is value
scifitoilet (16 days ago)
all hype. its value is way too high.
Yaz B (16 days ago)
WeWork is a real estate company valued like a tech company so it is very much overvalued. Take an average of the value of the company stated in the media and discount it by 70% and you have the real value.
Null Null (16 days ago)
Given that it's been 11 years since the last recession and we have another housing bubble I don't expect this to go so well.
Yugioh Pokemon (16 days ago)
Hotel lobbies are free :)
Marty Raymond (16 days ago)
So the company that buys/owns all the new property will be a separate entity from WeWork. Let that sink in.
Kay Flip (16 days ago)
smoke and mirrors company.
g (17 days ago)
It's a scam
Kris Ivanov (17 days ago)
WeWork going for an IPO not despite the $2b loss, but because of it.
Jack Ryan (17 days ago)
WeWork, for children who want to pretend they are entrepreneurs.
Alex (17 days ago)
A lot of bears in the comment section. I don’t know enough about WeWork to say whether it will fail or succeed, however, they aren’t as bad as many people in the comment section think. They have a huge footprint, growing membership and insane growth rates, major corporations like amazon etc renting their space... they have plans on buying their own real estate properties, leverage to negotiate down their lease agreements w landlords, and an incredible vision for what the “We Company” can do. Banking, gym, school, housing, office space... etc etc. This will create a cult like following amongst members. I work at a we work space, child goes to school there, I can go to the gym anytime and I live there... my bank is there as well. All of this in 1 building... imagine if we work owned that building instead of leased it. They could leave 2 or 3 floors open for commercial space such as grocery store, and shopping center. One would technically never have to leave the building and one would live with a bunch of like minded people. Every floor every person generating multiple streams of income. Synergy is endless. Only problem is massive up front investments which is what we see now. Also the idea that the office space is no different than a Starbucks or library... think about what an office needs. Telephones (land lines) to conduct business, private area to discuss w clients, area to meet w groups, printer, copier, different areas serve different roles assuming you have a team bigger than just yourself. Also to touch on the debt comment, many people really don’t understand that debt isn’t bad. For WeWork debt is amazing because they get access to a ton of Cash for a marginal cost. (High leverage). I.e. They get to spend $1million and only pay $80,000 per year to service that debt. Amazon wasn’t profitable until about 2-3 years ago, think about that. 1995-2016 not a single dollar in profit. WeWork could rly be the Amazon of the material world... biggest concern isn’t even the fact that they are burning through $2B it’s more about what the Cap Rate on the already established properties are and how consistent positive cash flows from them are. I’d be ok with them spending money all day if your telling me you’re getting 10+ percent cap rate. 10 years you’re breaking even more or less. Are they throwing money down the drain or throwing money at something that is yielding great rewards. Also how would WeWork do during a recession is huge. And I feel like they would be much more susceptible to economic downturns than other REITs
Min Tan (17 days ago)
I replayed when heard the beep sound at ~ 4 min. :/
Sufri H (18 days ago)
Do people actually use co-working spaces? Such a waste of money
Dylan Young (18 days ago)
Please tell me employees aren't falling for the concept of literally living your life at work away from your family and people you actually enjoy being around instead of your freaking boss.
Mike G (18 days ago)
Is a unicorn like a black swan? Animal spirits for low IQs.
Investor XRP (18 days ago)
I can see wework as a top 5 company in the future. I just wish I had more money to invest in it.
kavin kumar (18 days ago)
Why the report is sounding so pessimistic, it's a good choice to buy early after all they own building whose price goes up
Livefree Ordie (18 days ago)
Next company: WeAreF**ked
Enigma Productions (18 days ago)
Al caChing (18 days ago)
Ryan Crane (19 days ago)
This is how Pyramid Schemes work.
Competition Sports (Subscription Channel) (19 days ago)
LOL, people are buying into a new way of working?.....NO you aren't. Working in an office building is old school, it costs money to do that which is why more companies have reduced office space and have people operate from home now. Leasing space costs a lot of money especially short term so why bother? stay remote and keep costs down. All this is, is an attempt to create a market for all the start ups that are going on right now. Everyone is out to try and conquer the world by asking for seed money, and adding more expenses like office space is not the right answer.
John Smitherson (19 days ago)
Ouch! Maybe they're growing too fast for their own good. Next up: WeShit!...rented toilet. We make taking a dump cool again!
David (19 days ago)
"Look at losses as investments".. … Me : how are they even allowed to say such s*#t??
peadora (20 days ago)
If a company tell me they are renting their office from WeWork, they lost all my respect. Renting from WeWork simply tell me your company has no root and isn't stable. And it hint the owners are hipsters that might run away anytime. Uncool.
Sherwood Ang (20 days ago)
this will be dead in a few years. not tech company its a real estate company
littlegoobie (20 days ago)
so this is like an office space version of AirBnB? I'm missing something. I don't see why anyone would want or need this, maybe a few people here and there, but not on this scale.
Anni Lehtinen (20 days ago)
When I see corporate governance issues I know for sure that the company is going down sooner or later
Tall Random Guy (9 days ago)
Have they ever heard of a library?? My library even has a cafe, and its FREE(not the cafe). Am I missing something?
shunkahato (13 days ago)
A library with a cafe? Be still, my heart!
Taga Way (20 days ago)
Never heard of them.
Tsablis Thoj (20 days ago)
Short short short
Robin Östringer (20 days ago)
This will be a shitshow as soon as the bell rings.
Vincent Tan (20 days ago)
No talk about what the vision is for them in the video. Such as wanting to introduce CQ (Culture Intelligence) to the world.
yamamancha (20 days ago)
There's this great thing called the internet that allows freelancers to network themselves. This business is totally reliant on millions of people (= sheep) buying into their social construct. But the reality is "creators" don't need We, they just need a desk and a computer at home.
Louis rodriguez (20 days ago)
No never
pizzamen2000 (20 days ago)
Sounds like a bubble to me. Recession here we come!
Mr S (21 days ago)
Mr S (21 days ago)
Andrew H (21 days ago)
This is a golden opportunity to lose lots of money.
JJ Grey (21 days ago)
But isn't WeWork actually buying and owning these properties? So cash FLOW might be negative but equity (because when you own buildings in downtown areas that's a valuable commodity)makes it a positive...this could very well be a "take the long view" company...we shall see...I could be wrong here...but I can see how there is profit eventually...
JJ Grey (20 days ago)
But to repeat an old quote..."Buy land...they aren't making any more of it..." and to be honest I could make them profitable within a 24 month period...they've built a NETWORK and that is my specialty...done right it is a license to print $...just as I knew fBook would eventually be profitable (even though its IPO was very poorly handled and the stock price tanked) Sell 1 product and you're dependent on ta market that could change...with a NetWork you have infinite possibilities...IF you are good at it...I can't justify incompetence... But I do think that WeWork is a very good idea...
Daniel Iles - Small Business (20 days ago)
I think they are starting to buy properties, I am not sure they have done so yet. But if the real estate market turns and they have to liquidate they could be exposed to a lot more risk
Lisa Khan (22 days ago)
Honestly, wework can make more money IF the company focus to software. Not just office but you can rent or sell or buy property all around of the world with 3D image stuff (not just pictures that you can see in Internet nowday). This company more looks like another real estate speculation for me tbh.
Daniel Iles - Small Business (20 days ago)
Especially since the real estate can be replaced by any coffee shop that offers wifi
// (22 days ago)
These new companies getting an IPO will crash and burn so hard during the next financial crisis that 911 is going to look like a joke
elgyn (22 days ago)
anyone know whats the background music at 5:34?
Tomas T (23 days ago)
welive, wewhatever... just keep the hype going, like tesla with all these distant new models or uber with helicopters, bikes, etc..
Amoroso Gombe (23 days ago)
What is its unique value proposition? I think it's a turkey.
Eros Kaw (23 days ago)
This seems like a hot mess.
Fuckya Lookin at (23 days ago)
Overpriced office space. Not profitable.
Daniel Iles - Small Business (20 days ago)
Not distinguished from a coffee shop with free wifi really
MojoGrip (23 days ago)
I'd invest in wework as a real estate company
Daniel Iles - Small Business (20 days ago)
why not just get into REITs then?
Elephant In The Room (23 days ago)
I have a we work with high speed internet and its free.......its called the public library
Daniel Iles - Small Business (20 days ago)
haha, and coffee shops!
M17 (24 days ago)
Softbank pushed forward this business using cheap Saudi money! Stay away from this trap.
Donny Vu (24 days ago)
Add that to your short list of stock for tech bubble.
boson96 (25 days ago)
Sandeep Kumar (25 days ago)
Soft bank is the common denominator
Fred TwoSpuds (26 days ago)
Have tried to take a day here and there: frankfurt, paris, new york, philly, singapore, and even bangkok and they dont want people to rent a desk for a day contrary to what the beginning of this video says.
Fred TwoSpuds (20 days ago)
@Daniel Iles - Small Business at that point they werent interested in onsies, twosies visits. They were only interested in longer term commitments (6 month, I believe).
Daniel Iles - Small Business (20 days ago)
What is the minimum rent time?
gustavo espinosa (26 days ago)
Easy short.
Gerald Davis (26 days ago)
It it possible to short a company
Gerald Davis (26 days ago)
Your aving a bubble. It will not work
ricky v (26 days ago)
I am so sick and tired of these companies that are being valued at XYZ, yet make no money. And, a lot of times they carry debt. This mathematics has never made sense to me. :(
Matt Brewer (17 days ago)
ricky v the “amazon model” as its called, people seem to forget that for every amazon there are hundreds of failed ventures that burned cash and went bankrupt
Get Rich By 2020 (27 days ago)
Damn...Short WeWork
Grant Goldberg (27 days ago)
It's a ponzi scheme. They're running out of institutional investment money. Now they want to defraud the public.
booger king (28 days ago)
WeWork.. A millennial's way to move out of their mom's basement to a real office, and continue to pretend to work.
stoeger 2 (22 days ago)
So mllennials don't have jobs and live in basements, hmmm yea im sure plenty of them earn more than you
booger king (28 days ago)
Why would big corporations rent when they could just build their own. Lol! This guy look like another weedboy ceo
Fat Panda (27 days ago)
Depending on thier circumstances they may be better off renting, less risk. When you done you just leave.
Kyon H (28 days ago)
No offense but why does the CEO have this aunty vibes omg
booger king (28 days ago)
That's how most weedboy look
garyeflee (28 days ago)
Short the IPO. You're welcome.
David Tsang (28 days ago)
IPO = raising money to cover debts. DUH!
Ink Bold (29 days ago)
WeDie pretty soon
Blake Cornforth (29 days ago)
They’re literally just landlords
Marta Toribio (29 days ago)
They are an overglorified real state company
Xykloud DuPont (29 days ago)
oh com on seriously? its the same tactic Amazon CEO uses , outlive the rest by being the last one to die, when they all lost everything and then at that point it's a 180 turn ,since most of the competitors are out(meanwhile a small amount of lobbying for certain real estate rule- Denied by New York) most connected convenient way to buy reasonable price online products.(comfort and habit)
Ryan (29 days ago)
Quick answer- so they can cash out
James Young (29 days ago)
Referring to the revenue from longer term contracts as ‘subscription’ revenue at 6:38 is hilarious. If it were a REIT, they’d just call it rent...
C h. (30 days ago)
Uber and Lyft are trying to hold market share till driver less cars are viable then they will make good money. I dont see We Work's path to profit
John Wall (30 days ago)
Can't wait for this thing to go bankrupt
Neil Deep (1 month ago)
03:02 she's smart & beautiful ! wonder what her degree is in.
Foot Loose (1 month ago)
It's a scam!
ChrisOnAWave (1 month ago)
This just SCREAMS "WARNING! WARNING! WARNING!" all over it.
Lynch Léonie (1 month ago)
“Too big to fail” - we’ve all heard that before .....
☠MrHairyNutz☠ (1 month ago)
Then afterwards they'll declare bankruptcy.
Matthew Han (1 month ago)
WeWork sounds like a giant scam; the CEO leases buildings he owns to his own company for profit, pfft. SoftBank got duped, and now they're trying to dupe the masses.
houchi69 (1 month ago)
I don't trust the founder and Ashton Kutcher.
Burial (1 month ago)
I predict failure within 5 years.
GameMoves2 (1 month ago)
The US is creating another bubble to come and spoil the jobs and lives of people. SMH.
I'll Tell Ya What (1 month ago)
Loses 2B in a year and still isn't out of business. Absolutely mindboggling. Capitalism has failed miserably.
Steven C (15 days ago)
Lol this is proof capitalism is working. Those rich investors aren’t going to loose their money therefore they use the crappy system of capitalism to dump worthless stocks on individuals. Make their money back and recycle the process.
Huaiyuan Qu (1 month ago)
Tech bubble
Daniel Martinez (1 month ago)
WeWork will go bankrupt within the next 10 years. Once remote work becomes more acceptable anyone who invests in this company will be regretting their decision to invest in it.
Apple Juice Simpson (1 month ago)
And you thought *_Enron_* was bad? Just wait till this crap shoot begins hemorrhaging
NibiruLives (1 month ago)
The billionaire _players_ will have cashed in long before.
Teolulz (1 month ago)
i don't see any "tech." Elizabeth Holmes would LOVE to work here.
NibiruLives (1 month ago)
She can make the Benjamins rain!
gerovy king (1 month ago)
This still might have a better ending than GoT