WeWork has filed its S-1 documents to prepare for the upcoming IPO. This set of numbers is the big question for investors (quickly put together in SlideMagic 2.0):
Investment analysts are all over this document: unlike Facebook, or Uber, real estate is a relatively well-understood business, so people can apply traditional valuation methods to try to make sense of a valuation. Is this a gigantic money burning operation, or the start of one of the world’s most profitable tech giants that will change how people work together?
I think WeWork needs an investor presentation that takes the questions head on.
- What are the economics of a single location (finding. refurbishing, filling, etc.) per square meter, and back it up with data of actual locations. The S-1 contains a graph explaining the concept, but it lacks a y-axis.
- Show a scenario of the current real estate business, how many locations/members would you need to get to a stable, profitable operation
- Then, what other options are out there to start building other businesses on top of this.
I have not run the numbers, but I suspect that stage 1. and 2. will not be enough to justify the share price, and your decision to buy into the IPO will depend on what you believe the potential of 3. is.
Photo by Eloise Ambursley on Unsplash