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WeWork Attempts To Stage Its Redemption On The Public Market

Oct. 06, 2021 2:04 AM ETWeWork Inc. (WEWKQ) Stock36 Comments
Pacifica Yield profile picture
Pacifica Yield


  • WeWork is finally going public after its failed 2019 IPO.
  • The pandemic has created an unexpected tailwind with enterprise clients for the flexible workspace company.
  • With revenues expected to rise significantly in the years ahead, WeWork looks to finally realize a profit.

WeWork office building located in SOMA district, San Francisco

Sundry Photography/iStock Editorial via Getty Images

WeWork’s (BOWX) woes as a private highly valued SoftBank-funded company are well documented, mostly centring around ex-CEO and cofounder Adam Neumann's excesses. What came after the fall of a company that was

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Pacifica Yield profile picture
The equity market is an incredibly powerful mechanism as daily fluctuations in price get aggregated to incredible wealth creation or destruction over the long term. Pacifica Yield aims to pursue long-term wealth creation with a focus on undervalued yet high-growth companies, high-dividend tickers, and green energy firms. By Leo Imasuen

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Comments (36)

Maschuette profile picture
And it begins...WE submitted an S-1 with the SEC at midnight last night. They are going to do a 1/2 billion dollar equity raise which is what the author was afraid of.
@Maschuette please don't be chicken little, the sky is not falling 😀. After the IPO closed last month, they are just now registering with the SEC, the public shares issued related to the warrants and WeWork private shares. These are not new shares.
Maschuette profile picture
@SPACSpook for real?
Maschuette profile picture
Wow, i think you're right. Thats weird that they do it afterwards. I just got burned by another SPAC and now im jumpy. My bad
Hope some of you ignored the naysayers and picked up some 2025 warrants under $2 last week as I did the past few weeks. Took some profits at $2.60 today but staying long for the bulk of the position for a 2-3 bagger in a couple of years. WE trading a 11.50+ today!
We got our 2 bagger much sooner than we expected, the second day after the IPO 😀 . Took half off the table and will let the rest ride.
It would have been helpful if you had expanded on the qualitative comments about why the shares will fall immediately. WeWork is posting $2 billion in losses every year. Even when it posts $2 billion of revenues it has $2 billion of variable operating costs and $2 billion of fixed real estate expenses. While the company claims it will keep bringing down the variable costs, there is no way it can do anything about the fixed real estate expenses. They have signed 15 years worth of leases where they owe over $30 billion in total rent (roughly $2 billion a year) to the office landlords. WeWork will somehow have to magically double (100% increases) it’s revenues to $4 billion before it can stop losing money for its shareholders. That is never going to happen in this new world of remote working and relocations out of cities like New York and San Francisco. BOWX SPAC investors should VOTE AGAINT this acquisition of WEWORK and get their $10 a share back before it becomes $5 a share or even less.
I don't know that the BOWX shareholders will be the ones to sell, not least because many are bagholders from $14. Or the PIPE. It's the other 81% though that we need to look out for.
@Asset_light_stocks lol completely wrong!! This is no longer the bust it was. If this ipo'd normally? You're looking at a 30-40 stock. A spac is making this super cheap at $10! No way a company this size deserves a $5 share price... watch n learn...
@Mulder35 Mulder35 can you provide me one fundamental valuation driven argument for your price target?
Agree with you - it will fall before it rises in price, if at all.

WFH is a thing, and those revenue increases seem a bit fantastical, considering their revenue was halved in Q1 and they lost 200k clients. Increasing occupancy and cost-cutting should totally be the focus, and should make them profitable so their EPS numbers should improve a lot. However, that does not much to the top line.

Their Investor Day tomorrow will be interesting.
@Aminator you're both wrong. This article is a hit piece disguised as bullish. Drop significantly lower after the 10 merger price based on what? Because most spacs have? Ridiculous... this will have a major jump this month and it's trading cheaply at 10. Valuation is LOW for this and we all know it...see you guys in November and see who was right... ty
@Mulder35 Mulder35 think of it this way - why us price stuck at $10 and not moving anywhere? Because there is a natural floor created by the way SPACs work. If prices could move freely, which direction would it go?

Up? Nope - it would have moved up already otherwise, which it is free to do.

That leaves "down," unless you think WeWork is perfectly priced at $10.

Note that if redemptions are high, they will have to issue float which will tank the price even more. I'd give it a PT of $3-5 at most, at this stage .
They raised 800 million PIPE at $10. So that is your floor.

You are not going to get the 3-5 you are hoping for.


"The planned merger with the BowX Acquisition Corp. BOWX +0.20% SPAC values WeWork at $9 billion including debt, the companies announced Friday. As part of the deal, WeWork plans to raise $1.3 billion, including $800 million in what is called a private investment in public equity, or PIPE, from Insight Partners, funds managed by Starwood Capital Group, Fidelity Management, and others."

Before Covid Delta, WE private shares were valued at around $18 back in March and even BOWX was around $14. It tanked due to Delta but Covid Delta is getting under control all over the world. The investor update today was very positive with growth picking up. After the WE/BOWX transaction closes, BOWX SPAC sponsors are going to be owning 1.3% of the float, BOWX public shareholders 6.7%, PIPE 11.2%, former WeWork shareholders 80.8%. Except for the SPAC sponsor, everyone else paid $10 or more and has no reason to sell at even $10. So at most, we are looking at 1.3% SPAC redemption as I understand it. I think institutions will pick it up no problem with a growing business.
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