Bill Ackman gives WeWork zero value in terms of the company’s stock and debt value.
“I think WeWork has a pretty high probability of being a zero for the equity, as well as for the debt” said Bill Ackman, founder of hedge fund Pershing Square Capital Management.
Bill Ackman, a billionaire activist investor made his scathing comment about WeWork zero future value at the Robin Hood investor conference in October.
WeWork, co-founder Adam Neumann Israeli-American businessman in 2010 provides physical and virtual shared spaces and office services for entrepreneurs and companies. WeWork in its heyday employed more than 5,000 employees in over 280 locations, spread across 86 cities in 32 countries.
“I think WeWork has a pretty high probability of being a zero for the equity, as well as for the debt”
But WeWork’s poor management and unprofitable business model has been the primary reason why Bill Ackman gives WeWork zero value
WeWork has not been able to turn a profit since the company’s inception in 2010. Moreover, the company isn’t even close to being profitable with the company hemorrhaging capital to the tune of $219,000 every hour of the day, according to Business insider.
Last year WeWork clocked up over $2 billion in losses
WeWork burnt through more than $1bn of cash in the third quarter by accelerating its rollout of new properties. Standard & Poor last week downgraded WeWork to junk status “B-“ from “B”.
While Bill Ackman gives WeWork zero value intriguingly SoftBank, a Japanese investment giant has come to the company’s rescue with a refinancing deal
SoftBank’s rescue package amounts to $5 billion in exchange for an 80% stake in WeWork with the aim of turning around the company.
“The more we dig, the more we love the business”
MARCELO CLAURE (SoftBank)
Marcelo Claure, the SoftBank chief operating officer and chairman of WeWork told WeWork staff that the Japanese group was betting “everything we have” that it could make a success of the business even after most people advised it to cut its losses. “The more we dig, the more we love the business” he said.
So Softbank is doubling down on WeWork investments while Bill Ackman gives WeWork zero value
Moreover, Fitch Ratings recently warned that WeWork had “minimal headroom” to weather management mis-steps or an economic slowdown even after rescue by SoftBank.
Bill Ackman’s Pershing Square is adamant that SoftBank “should have walked away” from a WeWork rescue deal. “As someone who has put good money after bad, I think this looks like putting good money after bad” said Bill Ackman.
“It was supposed to be the largest IPOs of the year but instead, WeWork plunged into crisis after investors failed to buy into its valuation of USD 47 billion”
Bill Ackman gives WeWork zero value following the company’s recently failed IPO offering
It was supposed to be the largest IPOs of the year but instead, WeWork plunged into crisis after investors failed to buy into its valuation of USD 47 billion.
So the shared-workspace company was unable to spur demand for its IPO, despite the amount of liquidity sloshing around the financial system courtesy of the central bank’s massive monetary easing program. Investors were beginning to question WeWork’s valuation, a company that has yet to make a profit and continues to take up significant losses. The company’s valuation was startlingly wide-ranging from $60 billion and $90 billion. In the end, WeWork was forced to shelve its plans to go public as the shared-workspace company.
Bill Ackman gives WeWork zero value is also a story about the blowback from the central bank’s endless monetary easing, which distorts risk, litters the business landscape with Zombies that survive not because they are profitable but because they can suckle on the central bank’s easy money teat. Moreover, this easy money policy has created the west’s nomenklatura of financial ruling elites. Easy money for the chosen few, but it comes at a cost for the many.
Easy money policy for the upper echelons is aiding and abetting crony capitalism where businesses thrive, not as a result of risk but as a return on money amassed through a nexus between a business class and the political class. Capitalism isn’t broken it has just been displaced.
“The Wall Street Journal reported that Neumann would receive close to $1.7 billion from stakeholder SoftBank for stepping down from WeWork’s board and severing most of his ties to the company”
Bill Ackman gives WeWork zero value and yet the shared-workspace company, the ultimately unprofitable unicorn has managed to raise $12 billion
What’smore, WeWork’s cofounder Neumann who steered the company into a money black hole which amounted to no less than $219,000 every hour of the day has received a gold handshake.
The Wall Street Journal reported that Neumann would receive close to $1.7 billion from stakeholder SoftBank for stepping down from WeWork’s board and severing most of his ties to the company.
According to WeWorkers Coalition, Neumann remains as a consultant with an annual salary of $46 million. The New York Times called the company’s failed effort to go public and related turmoil, “an implosion unlike any other in the history of start-ups”, which it attributed to Neumann’s questionable tenure and the easy money previously provided to him by SoftBank, led by Masayoshi Son
In August 2019, the company was “besieged with criticism over its governance, business model, and ability to turn a profit”.
So if you are in the cozy club, even failure is rewarded handsomely. WeWork’s cofounder Neumann explained where he got the idea for physical and virtual shared spaces.
“During the economic crisis, there were these empty buildings and these people freelancing or starting companies” Neumann told the New York Daily News. “I knew there was a way to match the two. What separates us, though, is a community”.
Congratulations to Neumann for coming up with the idea. But why was so much capital thrown at a loss-making business for so long?
The reported public valuation of the company is currently around $10 billion, which is less than the $12.8 billion it had raised since 2010.
Bill Ackman gives WeWork zero value, needless to say the activist investor has no investments in WeWork and he claims no inside knowledge
Bill Ackman described its co-founder Adam Neumann as “an amazing salesman” but warned that it remained “enormously levered”.
WeWork is expected to undergo major restructuring which could cost 4,000 jobs, and the “surge” in new leases which it signed before pulling its planned stock market.